The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that amends the transition requirements and scope of the credit losses standard issued in 2016.
 
“Since issuing the credit losses standard, the FASB staff has been working with stakeholders to address questions and obtain feedback on the guidance,” stated FASB Chairman Russell G. Golden. “Their input helped us develop the clarifications and improvements in the new ASU to ensure a smoother transition to the standard.”

First, the ASU mitigates transition complexity by requiring entities other than public business entities—including not-for-profit organizations and certain employee benefit plans—to implement it for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This aligns the implementation date for their annual financial statements with the implementation date for their interim financial statements.
 
Second, the ASU clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard.
 
The effective date and transition requirements are the same as the effective dates and transition requirements in the credit losses standard, as amended by the new ASU.