This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our PRIVACY POLICY for more information on the cookies we use and how to delete or block them.
  • Accounting Alert February 2021

Possible extension of the date for COVID-19-related rent concessions past 30 June 2021

The International Accounting Standards Board (IASB) held a supplementary meeting on 4 February 2021 to discuss whether it should extend the period over which the practical expedient in IFRS 16 Leases, paragraph 46A can be used by lessees for ‘short cut’ accounting for COVID-19-related rent concessions (i.e. not needing to assess whether each concession is a lease modification).

It tentatively decided to extend the date from 30 June 2021 to 30 June 2022. When this amendment is approved (estimated late March 2021), entities will be able to use the practical expedient in paragraph 46A for COVID-19-related rent concessions where a reduction in lease payments affects payments due on or before 30 June 2022, rather than 30 June 2021.

Implications

We are likely to see more lessees using the practical expedient for COVID-19-related rent concessions than before including, for example, where:

  • Rent concessions negotiated during the first wave of COVID-19 affected payments due after 30 June 2021, and
  • Additional rent concessions negotiated due to extended lockdowns during the second wave where payments will be reduced beyond 30 June 2021.

More information

Please read BDO’s International Financial Reporting Bulletin, IFRB 2021 05 Extension to COVID-19 Practical Expedient (IFRS 16) for more information.

 

For more on the above, please contact your local BDO representative.

 


This publication has been carefully prepared, but is general commentary only. This publication is not legal or financial advice and should not be relied upon as such. The information in this publication is subject to change at any time and therefore we give no assurance or warranty that the information is current when read. The publication cannot be relied upon to cover any specific situation and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in New Zealand to discuss these matters in the context of your particular circumstances.
BDO New Zealand and each BDO member firm in New Zealand, their partners and/or directors, employees and agents do not give any warranty as to the accuracy, reliability or completeness of information contained in this article nor do they accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it, except in so far as any liability under statute cannot be excluded. Read full Disclaimer.