IASB proposes an amendment to extend the application period of COVID-19 Related Rent Concession under IFRS 16

February 17, 2021

Introduction

On 11 February 2021, International Accounting Standards Board (IASB) published an Exposure Draft (ED) proposing changes to IFRS 16 Leases. The amendment proposes to extend the practical expedient provided under the amendment to IFRS 16 Covid-19-Related Rent Concessions issued in May 2020. This practical expedient was applicable for rent concessions received for lease payments due on or before 30 June 2021. Therefore, the main objective for the proposed amendment is to provide relief for lessees in accounting for rent concessions that are being received for periods after 30 June 2021 due to the continuing Covid-19 pandemic.

Change Proposed

The ED proposes to extend the availability of the practical expedient for rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022, rather than only payments originally due on or before 30 June 2021. However, no changes were made to other conditions as outlined in the Amendment to IFRS 16 Covid-19-Related Rent Concessions and should be met to apply the practical expedient.

Who would be impacted?

1- Lessees that have already applied the practical expedient

    • must apply it consistently to contracts with similar characteristics and in similar circumstances where the extended scope is met.

2- Lessees who have previously elected not to apply the practical expedient

    • not allowed to elect this option.

3- Lessees who have not yet established an accounting policy on applying (or not applying) the practical expedient

    • can decide to apply the practical expedient
    • required to do so retrospectively and to apply it consistently to contracts with similar characteristics and in similar circumstances.

The commenting period for the ED is until 25 February 2021. IASB plans to complete any resulting amendment by the end of March 2021.

The exposure draft is available on the IASB website.

For details of IFRS 16 Covid-19-Related Rent Concessions issued in May 2020 refer to our previous article IFRS 16 Amendment: COVID-19-Related Rent Concessions.


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