FASB recently changed their approach for the effective dates for ASU's. Prior to 2019, the effective date of the implementation of a new ASU for public entities was typically one year prior to the effective date for all other entities. (i.e. a public company may have an effective date of fiscal years beginning after 12/15/18 and all other entities effective for fiscal years beginning after 12/15/19).

In 2019, FASB changed the policy for the majority of effective dates to be as follows:

• Public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 20X1,
• For all other entities, for fiscal years beginning after December 15, 20X3.

In other words, FASB changed their view on effective dates to continue to have public companies implement ASU's first but modified the implementation approach by excluding entities defined by the SEC to be small reporting companies from this category. FASB is now combining these small reporting companies with the other entities (typically private entities). The second change was that FASB now typically provides a 2 year delay for these other entities from when the public entities implemented a new ASU (used to be a one year lag).

Question (s): What are small entities eligible to be smaller reporting companies as defined by the SEC? Also, why do you believe that FASB provided for an additional year before these entities have to implement the new ASU's?