Entities that provide or receive rent concessions due to the COVID-19 pandemic need to consider whether to make an accounting election provided by the FASB staff to not evaluate whether rent concessions are lease modifications. Entities that make this election then need to decide whether to apply the lease modification guidance in ASC 842 to the concession or account for the concession as if it were contemplated as part of the existing contract. Entities that don’t make the elections may find it operationally challenging to evaluate the rights and obligations of each contract and apply the lease modification guidance to leases where a concession was not contemplated in the existing lease. Our publication highlights accounting considerations for affected entities and provides examples.
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