The Financial Accounting Standards Board has endorsed a consensus recommendation from the Private Company Council to remove the effective dates for four standards.
At a meeting on December 4, the PCC, which operates along with FASB under the umbrella of the Financial Accounting Foundation, recommended that FASB remove the transition requirements for four standards (see
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The PCC also reached a consensus to extend the transition guidance in those updates indefinitely.
FASB endorsed the recommendation at a meeting on December 16, thus making the guidance in the four accounting standards updates effective immediately by removing their effective dates:
The changes will allow private companies to forgo an initial preferability assessment that otherwise would have been required under Topic 250, Accounting Changes and Error Corrections, upon first election of the accounting alternatives in those Updates. Any subsequent election of those accounting alternatives will require a preferability assessment.
FASB also endorsed two other PCC consensuses relating to the four updates:
1. To indefinitely extend their transition guidance;
2. To require private companies electing one or more of those accounting alternatives to make the change using the original transition provisions included in those Updates for the first year applied. That is:
a. The accounting alternatives within Updates 2014-02, 2014-03, and 2014-07 must be applied as of the beginning of the first annual reporting period in which each alternative is elected.
b. The accounting alternative within Update 2014-18 must be applied as of the first in-scope transaction in the annual reporting period in which the alternative is elected.
FASB has directed its staff to draft an accounting standards update for vote by written ballot.
FASB anticipates the final standard will be issued in the first quarter of 2016.
