On Sept. 30, 2020, the Financial Accounting Standards Board (FASB) voted to affirm its exposed deferral of the effective date of the amendments in ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The effective date deferral of one year for all insurance entities was overwhelmingly supported by commenters on the exposure draft.
As a result, for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding those eligible to be smaller reporting companies (SRCs) as defined by the SEC, the amendments in ASC 2018-12 will be effective for fiscal years beginning after Dec. 15, 2022. Note that the FASB has not changed the guidance for the one-time determination of SRC status, which will still be based on the entity’s most recent determination as of Nov. 15, 2019. For all other entities, the amendments will be effective for fiscal years beginning after Dec. 15, 2024, and interim periods within fiscal years beginning after December 2025.
At that meeting, the FASB also voted to amend the proposed early application provisions of ASU 2018-12 whereby the early application transition date would be either the beginning of the prior period or the beginning of the earliest period presented, rather than only the beginning of the prior period. The change addressed one comment on the exposure draft that noted, as initially proposed, for a non-public subsidiary of an SEC filer that prepared its own standalone GAAP-basis financial statements there could actually be two transition dates in certain circumstances.
The FASB staff is moving to a ballot draft of a final standard for written vote by the board.
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