The amendments to IFRS 16 Leases 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.<\/p>\n
It applies to Covid-19-related rent concessions that reduce lease payments due on or before 30 June 2021.<\/p>\n
IFRS 16 specifies how lessees should account for changes in lease payments, including concessions. However, IASB said 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 companies face during the pandemic.<\/p>\n
The exemption is intended to provide support for lessees and enables them to continue providing information about their leases that is useful to investors. The amendment does not affect lessors.<\/p>\n
The amendments to IFRS 16 Leases 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\u2014interim or annual\u2014not yet authorised for issue.<\/p>\n
Hans Hoogervorst, IASB chair, said: \u2018The 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.\u2019<\/p>\n
IASB is also consulting on proposals to update the IFRS Taxonomy to reflect the disclosure requirement included in this amendment. The deadline for comments on this is 29 June.<\/p>\n