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IFRS 16 and COVID-19

 

Background

The COVID-19 pandemic has led to some lessors providing relief to lessees by deferring or relieving them of amounts that would otherwise be payable.  In some cases this is through negotiation between the parties, but can be as a consequence of a government encouraging or requiring that the relief be provided. Such relief is taking place in many jurisdictions in which entities that apply IFRS Standards operate.

When there is a change in lease payments, the accounting consequences will depend on whether that change meets the definition of a lease modification, which IFRS 16 Leases defines as “a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term)”.

This project was set up to provide practical relief to lessees in accounting for rent concessions arising as a result of the COVID-19 pandemic.

 

Current status of the project

The IASB first discussed this issue in April 2020. An exposure draft of proposed amendments was published on 24 April 2020. The exposure draft has a 14-day comment period (8 May 2020).

 

Project milestones

Date Development Comments
17 April 2020 Issues first discussed by the IASB
24 April 2020 ED/2020/2 Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16) published the exposure draft has a 14-day comment period (8 May 2020)

 

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.