The Financial Accounting Standards Board (FASB) has issued ASU 2020-05 in response to the ongoing impacts to US businesses in response to the coronavirus (COVID-19) pandemic. Accounting Standards Update (ASU) 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) Effective Dates for Certain Entities provides a limited deferral of the effective dates for implementing previously issued ASU 606 and ASU 842 to give some relief to businesses and the difficulties they are facing during the pandemic.
Revenue from Contracts with Customers (Topic 606)
ASU 2014-09, Revenue from Contracts with Customers (Topic 606) provided new comprehensive guidance for revenue recognition. ASU 2020-05 affects franchisers that are not public business entities, not-for-profit entities, and other entities that have not yet issued financial statements that reflect the new revenue recognition guidance. These entities may defer application to fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
Leases (Topic 842)
ASU 2020-05 affects entities in the “all other” category and public Not-For-Profit entities that have not gone into effect yet regarding ASU 2016-02, Leases (Topic 842) (those that are not public businesses entities, certain not-for-profit entities and certain employee benefit plans). Entities in the “all other” category may defer to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
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