FASB Delays Long-duration Contracts’ Effective Date

On Wednesday, June 10, the Financial Accounting Standards Board (FASB) met virtually to delay one significant new accounting standard and approve two others as Russell Golden completed his seven-year term as outgoing Chairman.

The Board approved an additional one-year delay of ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted improvements to the Accounting for Long-Durations Contracts. The objectives are to improve the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity. Long-duration contracts typically include life, disability, and long-term care policies, as well as annuities. The update applies to all insurance entities that issue long-duration contracts as defined in Topic 944, but not to policyholders of the contracts or noninsurance entities. The revised deferred effective date for non-SEC filers applies to fiscal years beginning after December 15, 2023.

Members also approved a proposed update (Project 2019-730) of ASC 470-20 and ASC 815-40 to simplify the current complexity of accounting guidance for convertible instruments and contracts in an entity’s own equity. The update is generally effective for non-SEC filers with fiscal years beginning after December 15, 2023.

Finally, the Board approved ASU 2018-08 related to nonprofits’ disclosure and presentation of gifts-in-kind to improve presentation and disclosure of contributed nonfinancial assets.  This update is generally effective for annual reporting periods beginning after June 15, 2021.