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Leases – Accounting for rent concessions as a result of the COVID-19 pandemic (Further amendments to Section 3065) [ED]

Proposed Ef­fec­tive date:

This amendment would extend the relief period for both lessees and lessors on accounting for lease modifications received or granted as a result of the COVID-19 pandemic to December 31, 2022.

Next steps:

The AcSB will start reviewing the feedback on the Exposure Draft in August 2021

Last updated:

March 2021

Overview

As a re­sult of the COVID-19 pan­demic, many en­ter­prises are re­ceiv­ing rent con­ces­sions. This in­cludes lease pay­ment de­fer­rals or pay­ment for­give­ness, or they are rene­go­ti­at­ing lease terms.

Sec­tion 3065Leases pro­vides guid­ance on ac­count­ing for changes in the pro­vi­sions of an ex­ist­ing lease and re­quires that any such changes be ac­counted for as a new lease (i.e. a lease mod­i­fi­ca­tion). This could be oner­ous for pri­vate en­ter­prises with many leases if all rent con­ces­sions needed to be ac­counted for as new leases. Ac­cord­ingly, the AcSB de­cided to amend Sec­tion 3065 to pro­vide re­lief for both lessees and lessors on ac­count­ing for rent con­ces­sions as a re­sult of the COVID-19 pan­demic.

In November 2020, the AcSB amended Section 3065, Leases to provide an option for both lessees and lessors to not account for COVID-19-related lease modifications as new leases. The existing relief is limited to lease payments originally due on or before December 31, 2021.

In response to the ongoing effects of the COVID-19 pandemic and the possibility that lessors may grant rent concessions past December 31, 2021, the AcSB proposes in this Exposure Draft to extend the optional relief for both lessees and lessors to December 31, 2022. Comments by stakeholders are requested by July 30, 2021.

 

Other developments

June 2021

On June 30, 2021, the AcSB re­leased an Exposure Draft that proposes to extend the relief period for both lessees and lessors on accounting for lease modifications received or granted as a result of the COVID-19 pandemic to December 31, 2022. This amendment would also apply to not-for-profit organizations (NFPOs) applying the standards in Part III of the Handbook, as relevant.  Com­ments by stakeholders are re­quested by July 30, 2021.

 

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