In May 2020, the IASB issued Covid-19-Related Rent Concessions - Amendment to IFRS 16 Leases (the amendment).
The International Accounting Standards Board (the IASB or the Board) amended the standard to provide an optional relief to lessees from applying IFRS 16’s guidance on lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. This publication provides detailed guidance on the accounting for rent concessions by both lessees and lessors and includes many illustrative examples.
The objective of the amendment is to provide lessees that have been granted COVID-19 related rent concessions by lessors with practical relief, while still providing useful information about leases to users of the financial statements.
This publication discusses how IFRS 16, including the recently issued amendments to IFRS 16’s lessee guidance, is applied to rent concessions and is intended to help entities consider the effects of applying it, as follows:
- Section 1 discusses the assessment of whether a rent concession is a lease modification.
- Section 2 discusses how a lessee accounts for a rent concession that is a lease modification; whether a lessee can apply the amendment to IFRS 16 for COVID-19 related rent concessions; and how to account for rent concessions that are not accounted for as lease modifications (i.e., when a lessee elects to apply the option or when the concession is not a lease modification).
- Section 3 discusses how a lessor accounts for rent concessions.