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Financial Reporting and the Law

On April 1, the FASB decided to defer the effective date of the new revenue recognition standard to interim periods of public entities within their annual reporting periods that begin after December 15, 2017. Early adoption is permitted, but only for interim periods within annual periods that begin after December 15, 2016, which is the standard’s original effective date for public entities.

The FASB will issue a proposed Accounting Standards Update that sets forth the FASB’s decision on the effective date. Although the FASB could change its approach to the deferred effective date as a result of comments it receives during the 30-day comment period on the proposed Accounting Standards Update, we believe that the FASB will not likely change its mind on providing entities with more time to get ready to implement the new revenue recognition standard. Not only have entities advised the FASB that they need additional time to evaluate the impact of the standard on, and make any required changes to, their systems and processes, but the FASB also decided at earlier meetings to issue proposed Accounting Standards Updates to improve additional guidance. The FASB will issue a proposed Accounting Standards Update to provide additional guidance with respect to licenses of intellectual property, the identification of performance obligations, and noncash consideration and collectability.

In addition, the FASB decided at a prior meeting to provide relief relating to the transition to the requirement in the revenue recognition standard, ASU 2014-09, that sales taxes collected from customers be excluded from the transaction price.