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Effective Date Delayed for Leases, Credit Losses, Hedging & Insurance

CECL Leases Hedging Insurance Effective Dates Change

The FASB issued two Accounting Standards Updates (ASUs) earlier this month that finalize various effective date delays for standards on leases, current expected credit losses (CECL), hedging, and long-duration insurance contracts:

  • ASU 2019-09, Financial Services—Insurance (Topic 944): Effective Date,
  • ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.

Lease Standard ASU 2016-02

ASU 2019-10 defers the effective date of the Lease standard by an additional year for certain entities (which includes private companies, NFPs, and employee benefit plans not included in the paragraph below) for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This changes the effective date for those entities from calendar year 2020 to calendar year 2021. Early application would continue to be allowed.

Because the Lease standard is already effective for:

  • public business entities,
  • NFPs that have issued or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or an over-the-counter market,
  • and EBPs that file or furnish financial statements with or to the SEC,

the FASB retained the effective date for those entities, which is applicable to fiscal years beginning after December 15, 2018 (calendar year 2019).

Credit Losses Standard (ASU 2016-13)

Under ASU 2019-10, the mandatory effective dates for the Credit Losses standard are amended to the following:

  1. PBEs that meet the definition of an SEC filer, excluding smaller reporting companies (SRCs) as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years
  2. All other entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years

ASU 2019-10 also amends the mandatory effective date for the elimination of Step 2 from the goodwill impairment test (ASU 2017-04). Those amendments maintain the FASB’s intentional alignment of the mandatory effective dates for Goodwill with those for Credit Losses. Early application of Goodwill continues to be allowed for interim and annual goodwill impairment tests with a measurement date on or after January 1, 2017.

Hedging Standard (ASU 2017-12)

Because the Hedging standard is already effective for all PBEs, the FASB retained the effective date for those entities, which is applicable to fiscal years beginning after December 15, 2018 (calendar year 2019), including interim periods within those fiscal years.

The FASB decided to defer the mandatory effective date for the Hedging standard for all other entities by an additional year. Therefore, the Hedging standard is effective for entities other than PBEs for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This changes the effective date for those entities from calendar year 2020 to calendar year 2021. Early application continues to be allowed.

Insurance Standard (ASU 2018-12)

The amendments in ASU 2019-09 defer the effective date of the amendments in the Insurance Standard for all entities. For PBEs that meet the definition of an SEC filer, excluding entities eligible to be SRCs as defined by the SEC, the amendments in ASU 2018-12 are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the amendments in ASU 2018-12 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application of the amendments in ASU 2018-12 is permitted.

The FASB prepared the chart above to explain the effective date delays. 

To discuss the specific impact on your organization, please call us or email info@dmlo.com.

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