Alert: FASB Accounting Standards Update No. 2019-10 – Changes in Effective Dates for Credit Losses, Derivatives and Hedging, and Leases Standards

Category: US GAAP

Alert: FASB Accounting Standards Update No. 2019-10 – Changes in Effective Dates for Credit Losses, Derivatives and Hedging, and Leases Standards

On November 15, 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-10 Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.

This ASU introduces FASB’s philosophy to extend and simplify how effective dates are staggered for a major ASU between larger public companies and all other entities, including small reporting companies (SRC), private companies, not-for-profit organizations, and employee benefit plans. It is anticipated that the Board will consider requiring an effective date for a major ASU to be staggered by at least two years between these larger public companies and all other entities to help ease the implementation challenges faced by these other entities.

For an entity to be eligible as an SRC, it must be an issuer as defined by the SEC and may not exceed established levels of public float, annual revenue or both as defined by the SEC. According to the SEC definition, the following entities are not eligible for SRC status: investment companies (including business development companies), asset-backed issuers and majority-owned subsidiaries of a parent company that is not an SRC.

This ASU also applies FASB’s new philosophy to defer certain mandatory effective dates of the following major ASUs (including any subsequent amendments to these ASUs) for SRCs, private companies, not-for-profit organizations, and employee benefits plans:

Early application continues to be permitted for all of these ASUs. The following table outlines the resulting changes in mandatory effective dates:

Amended Effective Dates[1] as a Result of ASU 2019-10

Impacted ASU

Public Business Entities

All Other Entities

ASU No. 2016-13 Financial Instruments – Credit Losses (Topic 326)

As Issued

December 15, 2019 (SEC filers)

December 15, 2020 (Non SEC filers)

December 15, 2021

Revised

December 15, 2019 (SEC filers only, excluding SRCs)

December 15, 2022 (including SRCs)

ASU No. 2017-04 Intangibles – Goodwill and Other (Topic 350)

As Issued

December 15, 2019 (SEC filers)

December 15, 2020 (Non SEC filers)

December 15, 2021

Revised

December 15, 2019 (SEC filers only, excluding SRCs)

December 15, 2022 (including SRCs)

ASU No. 2017-12 Derivatives and Hedging (Topic 815)

As Issued

December 15, 2018

December 15, 2019[2]

Revised

No change

December 15, 2020[3]

ASU No. 2016-02 Leases (Topic 842)

As Issued

December 15, 2018 (including not-for-profit conduit bond obligors or employee benefit plans that file with or furnish financial statements to the SEC)

December 15, 20192

Revised

No change

December 15, 20203

[1] Effective dates are for fiscal years beginning after dates stated within the table and include interim periods therein, unless otherwise specified.
[2] Effective for interim periods within fiscal years beginning after December 15, 2020.
[3] Effective for interim periods within fiscal years beginning after December 15, 2021.

To access the full script of ASU No. 2019-10, click here.

This communication contains a general overview of the topic and is current as of November 15, 2019. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person’s use of or reliance upon this material. © MNP LLP 2019. All rights reserved.

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Michelle Balmer

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.