28. May 2020

IASB publishes amendment to IFRS 16 Leases regarding lessee-accounting for rent concessions in the context of the coronavirus pandemic

The IASB has published Amendment to IFRS 16 Covid-19-Related Rent Concessions on 28 May 2020 (further information).

Against the background of rent concessions currently observable in many countries, IFRS 16 is amended to grant lessees an exemption from the assessment of whether a rent concession relating to the coronavirus pandemic is to be classified as a lease modification. The exemption applies only to payments originally due on or before 30 June 2021.

The application of this optional exemption results in accounting for these rent concessions as if they were not a modification of the lease. This eliminates the need for the reporting entity to review all leases, to make a legal assessment of the rent concession against the background of the respective contract clauses and to revise discount rates.
The amount recognised in profit or loss to reflect changes in lease payments that arise from covid-19-related rent concessions has to be disclosed.

The amendment is effective for reporting periods beginning on or after June 1, 2020; this also applies to interim reports. Earlier application is permitted.

Note: There are no changes to the accounting of lessors.