A proposal issued by FASB on Monday would amend the transition requirements and scope of the board’s new standard for accounting for credit losses.
Proposed Accounting Standards Update (ASU), Codification Improvements to Topic 326, Financial Statements — Credit Losses, is a response to concerns about the standard that were expressed to FASB. The proposal is intended to decrease transition complexity by requiring entities other than public business entities to implement it for fiscal years beginning after Dec. 15, 2021, including interim periods within fiscal years. This change would align the implementation date for those entities’ annual financial statements with the implementation date of their interim financial statements.
In addition, the proposal would clarify that receivables arising from operating leases should be accounted for in accordance with the board’s leases standard and are not within the scope of the credit losses standard.
“The proposed ASU addresses areas of uncertainty brought to our attention by our stakeholders,” FASB Chairman Russell Golden said in a news release. “It is intended to reduce transition complexity and represents our ongoing commitment to support a successful transition to our standards.”
Comments on the proposal can be made through Sept. 19 at FASB’s website.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.