The FASB Delays Certain Effective Dates for Credit Losses, Leases, Hedging, and Long-Duration Insurance Standards

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

  • ASU No. 2019-10, Financial InstrumentsCredit 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 No. 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 effective dates for each of the standards are now as follows:

CECL (ASU No. 2016-13) Effective Date

For public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The one-time determination of whether an entity is eligible to be a smaller reporting company should be based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations.

For all other entities, for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early application is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

Leases (ASU No. 2016-02) Effective Date

A public business entity, a not-for-profit entity that has issued or is a conduit bond obligor for securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the U.S. Securities and Exchange Commission, for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Earlier application is permitted.

All other entities for financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Earlier application is permitted.

Derivatives and Hedging (ASU No. 2017-12Effective Date

For public business entities, for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

For all other entities, for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

Early adoption, including adoption in an interim period, is permitted.

Insurance (ASU No. 2018-12) Effective Date

For public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The one-time determination of whether an entity is eligible to be a smaller reporting company should be based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations. Early application is permitted.

For all other entities, for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application is permitted.

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