International Accounting Standards Board (IASB) issues amendment to IFRS 16 regarding COVID-19-related rent concessions

International Accounting Standards Board (IASB) issues amendment to IFRS 16 regarding COVID-19-related rent concessions

• 04 June 2020
• Accounting
• South African Accounting Academy

The amendment exempts lessees from having to consider individual lease contracts to determine whether rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and allows lessees to account for such rent concessions as if they were not lease modifications. It applies to COVID-19-related rent concessions that reduce lease payments due on or before 30 June 2021.

IFRS 16 specifies how lessees should account for changes in lease payments, including concessions. However, applying those requirements to a potentially large volume of COVID-19-related rent concessions could be practically difficult, especially in the light of the many challenges stakeholders face during the pandemic. This optional exemption gives timely relief to lessees and enables them to continue providing information about their leases that is useful to investors. The amendment does not affect lessors.

The amendment is effective 1 June 2020 but, to ensure the relief is available when needed most, lessees can apply the amendment immediately in any financial statements—interim or annual—not yet authorised for issue.

The amendment is designed to make it easier for lessees, especially those with a lot of lease contracts, to account for COVID-19-related rent concessions while still providing useful information for investors.

Click here to download the 14-page amendment.

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