IASB will propose to extend practical relief on rent concessions

  • IASB meeting (blue) Image
  • covid1 Image

04 Feb 2021

In a supplementary meeting held earlier today, the IASB discussed extending the practical relief in IFRS 16, which permits lessees not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and, instead, to account for those rent concessions as if they were not lease modifications.

Among other conditions, the 2020 amendments to IFRS 16 permits a lessee to apply the practical expedient only to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. Stakeholders have pointed out, however, that the ongoing significance and protracted effects of the pandemic were not envisaged at the time the Board developed the practical expedient, as in many jurisdictions the ongoing effects of the pandemic are at least as significant now as they were in May 2020.

The IASB followed this line of argument and decided to propose to extend the relief to reductions in lease payments originally due on or before 30 June 2022 (with one Board member dissenting). The exposure draft to be published will propose retrospective application, which means that a lessee who has applied the initial expedient might possibly be required to reverse lease modification accounting for rent concessions that did not qualify because of the original time limit.

Given the urgency of the matter and with permission of the Trustees, the exposure draft will have a 14-day comment period. Final amendments are expected by the end of March 2021.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.