Accounting Alert: FASB Votes to Delay Revenue Recognition Standard

On Wednesday, April 1st, the Financial Accounting Standards Board (FASB) voted to defer the effective date of the new revenue recognition standard by one year for both public and private companies. The deferral will result in nonpublic entities applying the new revenue recognition standard in annual reporting periods beginning after December 15, 2018 (i.e., 2019 for calendar-year entities) and interim reporting periods beginning after December 15, 2019 (in other words, nonpublic entities will not be required to apply the new revenue recognition standard in interim periods within the year of adoption). Public entities will apply the new revenue recognition guidance in annual reporting periods beginning after December 15, 2017, and interim reporting periods within annual reporting periods beginning after December 15, 2017, as a result of the deferral.

Both public and nonpublic entities will have the option to apply the new revenue recognition standard as of the original effective date for public entities (annual periods beginning after December 15, 2016, or 2017 for calendar-year entities). Early adoption prior to that date would not be permitted.

Elliott Davis Decosimo Observation: The deferral of the effective date of the new revenue recognition standard will not be official until the FASB issues a final Accounting Standards Update after the exposure period and due process is completed. In the meantime, if you have questions, please contact your Elliott Davis Decosimo advisor.