The International Accounting Standards Board (IASB) has published a two-week consultation on a proposal to extend by one year the application period of the amendment to IFRS 16 Leases issued in 2020 to help lessees accounting for covid-19-related rent concessions
The original amendment was issued in May 2020 to make it easier for lessees to account for covid-19-related rent concessions, such as rent holidays and temporary rent reductions, while continuing to provide useful information about their leases to investors.
The practical relief currently applies to rent concessions that reduce only lease payments due on or before 30 June 2021.
The proposals would apply the amendment for annual reporting periods beginning on or after 1 April 2021.
In response to calls from stakeholders and because the covid-19 pandemic is still at its height, the IASB proposes to extend the relief to cover rent concessions that reduce only lease payments due on or before 30 June 2022.
Earlier application is permitted, including in financial statements not yet authorised for issue at the date the amendment is issued. It will also be possible to apply the amendment retrospectively, recognising the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment.
The Trustees of the IFRS Foundation have approved a shorter-than-normal comment period of 14 days for this consultation due to the urgent nature of the proposal.
The deadline for submitting comments on the consultation is 25 February 2021.