On November 15, the FASB issued two ASUs that contain a sweeping set of split deferrals—for a subset of companies—on new accounting rules for CECL, long-term insurance contracts, leases and hedge accounting.
- ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, finalizes various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies applying the credit losses (CECL), leases, and hedging standards
- ASU 2019-09, Financial Services—Insurance (Topic 944): Effective Date, finalizes insurance standard effective date delays for all insurance companies that issue long-duration contracts, such as life insurance and annuities
The decision means the effective date of ASU 2016-13, Measurement of Credit Losses on Financial Instruments, would change from 2021 to 2023 for smaller reporting companies (SRCs), and from 2022 to 2023 for private companies and nonprofits (these dates refer to calendar-year-end entities). SRCs as defined by the Securities and Exchange Commission (SEC) are those that either have a public float of less than $250 million, or annual revenue of less than $100 million and no public float or public float of less than $700 million.
The FASB also decided that ASU 2016-02, Leases, and ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, will be deferred one year from 2020 to 2021 for private companies and nonprofits (calendar-year-end). The leases and hedging rules are already in effect for public companies and therefore no date changes can be made for those companies.
In addition, ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, will be deferred two years from 2022 to 2024 for SRCs, private companies and nonprofits, and one year from 2021 to 2022 for calendar-year-end public companies.
The graphic below illustrates the new effective dates:
* Assumes December 31 fiscal year-end.