In response to the COVID-19 pandemic and to public comments proposing to delay Accounting Standard Codification Topic 606 (“ASC 606”) Revenue From Contracts With Customers solely for franchisors, the Financial Accounting Standards Board (“FASB”) went one step further and voted overwhelmingly in favor of delaying ASC 606 for all nonpublic business entities that have not issued their financial statements implementing ASC 606.
The comments addressed those companies that have not yet filed their financial statements and are currently focusing 100% of their resources on keeping their businesses alive.
The FASB is drafting the final Accounting Standard Update (“ASU”), which will give nonpublic entities the option to adopt the standard according to the current implementation date or defer an additional year.
The FASB has already noted it will vote in favor of this ASU. The FASB would postpone the required adoption of ASC 606 to fiscal years beginning after December 15, 2019, pushing out the effective date to January 1, 2020 for nonpublic entities with calendar year-ends.
For organizations that have already adopted this standard, the current economic environment will likely have impacts in the application of the standard. Entities may have to reassess their estimates of variable consideration or modify their standalone selling prices, due to changes in prices impacted by supply and demand.
BPM’s Technical Accounting group can assist with the adoption and application of the revenue recognition standard.
Our goal is to provide efficient accounting advisory services, so you can continue to focus on your core business operations. Contact BPM’s Will Tanem to learn more.
Find additional information and resources during the coronavirus crisis on BPM’s COVID-19 Resource Center.