IFRS Bulletin 2020-11 – Accounting for rent concessions: Lessee FAQs
03. Juli 2020
On 28 May 2020, the IASB issued amendments to IFRS 16, which provide relief for lessees in accounting for rent concessions granted as a direct consequence of COVID-19. The global pandemic has resulted in many different types of concessions being agreed between lessors and lessees, including rent deferrals, rent abatement/forgiveness and many other types of relief.
The IASB decided to amend IFRS 16’s requirements for lessees to simplify the lessee accounting requirements for rent concessions.
The Amendments - Lessees
IFRS 16 has been amended to:
(a) Provide lessees with an optional exemption from the requirement to determine whether a COVID-19-related rent concession is a lease modification; and
(b) Require lessees that apply the exemption to account for COVID-19-related rent concessions as if they were not lease modifications.
The criteria that must be satisfied for a rent concession to qualify for the practical expedient are summarised in the flowchart in Section 3. An explanation of the criteria and the practical implications of applying the practical expedient follow afterwards.
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