FRC proposes extending Covid-19 related rent concessions

The Financial Reporting Council (FRC) has issued an exposure draft that proposes to extend the application period of requirements that cover the accounting treatment of temporary rent concessions occurring as a direct consequence of the Covid-19 pandemic by one year

FRED 78 proposes that requirements originally introduced into FRS 102 and FRS 105 in October 2020 apply to rent concessions that reduce only lease payments originally due on or before 30 June 2022, provided the other conditions for applying the requirements are met.

As pandemic restrictions continue, extending the existing time condition is considered necessary to ensure these concessions are accounted for consistently and in a way that best reflects their substance.

Consideration was also given to the risk of the treatment being applied too broadly as a result of extending the time condition. It was concluded that the frequency with which temporary Covid-19 related rent concessions are likely to be granted may decline in the future as pandemic restrictions are lifted, and that the other criteria for applying the requirements also mitigate this risk.

The amendments are proposed to be effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

The FRC expects to finalise these amendments in the first half of the year.

The consultation on FRED 78 closes for comment on 11 May 2021.

FRED 87 exposure draft

Sara White |Editor, Accountancy Daily, published by Croner-i

Sara White is editor of Accountancy Daily, published by Croner-i, and in...

View profile and articles

4
Average: 4 (1 vote)

Rate this article

Related Articles
Subscribe