NZASB Update 2/2021
Proposed amendment to IFRS 16 to make it easier for lessees to account for COVID-19-related rent concessions
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This NZASB Update provides you with an overview of the New Zealand Accounting Standards Board’s recent activities, any new standards or interpretations, as well as other matters of interest. |
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IASB Exposure Draft: Covid-19-Related Rent Concessions beyond 30 June 2021 (Proposed amendment to IFRS 16)
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Applies to: For-profit |
The International Accounting Standards Board (IASB) has published an exposure draft proposing to amend IFRS 16 Leases to make it easier for lessees to account for COVID-19-related rent concessions, such as rent holidays and temporary rent reductions.
In June 2020 the IASB issued an amendment to IFRS 16 Leases which exempts lessees from having to consider whether COVID-19-related rent concessions are lease modifications, allowing them to account for these changes as if they were not lease modifications. In other words, it allows lessees to reflect the rent concessions by directly reducing the value of the associated lease liability and right-of-use asset rather than completing the more complex assessment required for a lease modification.
This amendment currently applies to COVID-19-related rent concessions that reduce lease payments due on or before 30 June 2021.
As a result of the ongoing impact of the COVID-19 pandemic, it has become clear that COVID-19-related rent concessions are being offered beyond the originally expected date. The ED proposes to extend the time period for which the amendment applies to capture any reduction in lease payments originally due on or before 30 June 2022.
The IASB has responded quickly to provide support to stakeholders at this difficult time. Accordingly, the comment period on the proposal is short – 14 days.
Due to the short 14-day comment period, we encourage Tier 1 and Tier 2 for-profit entities to comment on this ED directly to the IASB (with a copy to the NZASB).
Comments on the proposals in the ED are due to the IASB (with a copy to the NZASB) by 25 February 2021
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NZASB Update is intended to provide subscribers with a summary of the recent activities of the New Zealand Accounting Standards Board (NZASB). Links to websites are correct at the time of publication. Subscribers should not rely on this newsletter as a definitive publication of updates. The External Reporting Board and its sub-Board the NZASB do not guarantee, and accept no legal liability whatsoever arising from or connected to, the accuracy, reliability, currency, timeliness or completeness of this newsletter. The information contained in this newsletter does not constitute advice and should not be relied upon as such. NZASB Update refers to the work of the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB) and uses registered trademarks of the IFRS Foundation (for example, IFRS® Standards, IFRIC® Interpretations and IASB® papers). |