IFRS 16 Amendment: COVID-19-Related Rent Concessions
12 July 2020
The International Accounting Standards Board (IASB) has issued Covid-19-Related Rent Concessions on 28 May 2020 which amendment IFRS 16 Leases. The main purpose of this amendment is to provide practical relief for lessees in accounting for rent concessions received as a result of the COVID-19 pandemic. The amendment provides lessees with the option not to assess whether rent concessions received as a result of COVID-19 are lease modification.
Under IFRS 16 Leases, rent concessions that change the scope or overall consideration for a lease that was not part of the original conditions of an agreement is considered as lease modification. The lease modification treatment can be cumbersome for lessees with a large number of leases with different conditions and different rent concessions especially in the current difficult situation of the COVID-19 pandemic.
In this publication, we summarise the important changes introduced in the amendment and how the lessee accounts for rent concessions based on the type of concession received.