FASB and IASB Propose One-year Deferral of Revenue Recognition Accounting Standard | Practical Law

FASB and IASB Propose One-year Deferral of Revenue Recognition Accounting Standard | Practical Law

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) proposed to defer the effective dates for their converged accounting standard on revenue recognition by one year.

FASB and IASB Propose One-year Deferral of Revenue Recognition Accounting Standard

Practical Law Legal Update 7-610-9585 (Approx. 5 pages)

FASB and IASB Propose One-year Deferral of Revenue Recognition Accounting Standard

by Practical Law Corporate & Securities
Published on 29 Apr 2015 • USA (National/Federal)
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) proposed to defer the effective dates for their converged accounting standard on revenue recognition by one year.
On April 29, 2015, the Financial Accounting Standards Board (FASB), the entity responsible for US generally accepted accounting principles (US GAAP), and the International Accounting Standards Board (IASB), the entity responsible for international financial reporting standards (IFRS), proposed to defer the effective dates for their converged accounting standard on revenue recognition by one year. The new standard, which applies to both US GAAP and IFRS, is intended to improve and align US and international financial reporting of revenue from contracts with customers and their related costs. The FASB and the IASB jointly issued the standard in May 2014 (see Legal Update, FASB and IASB Jointly Issue Converged Accounting Standard on Revenue Recognition).
If the proposal is approved, the new deferred effective dates for the accounting standard would be as follows:
  • For public business entities, certain not-for-profit entities and certain employee benefit plans, the new standard would take effect for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application would be permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.
  • For all other entities, the new standard would take effect for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Application would be permitted earlier only as of:
    • an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period; or
    • an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the reporting period in which an entity first applies the new standard.
The FASB and the IASB issued the proposal in response to requests from stakeholders to defer the effective dates of the new accounting standard. They are accepting comments on the proposal until May 29, 2015.
To learn more about financial reporting in the US, see Practice Notes, Financial Reporting in the US: Basic Concepts and Financial Reporting in the US: Key Topics for Corporate Counsel.