IASB Plans to Extend IFRS 16 support for Lessees
The International Accounting Standards Board (IASB) recently published a consultation with regards to a proposal related with the extension in the application period of amendment to IFRS 16 Leases, by one year. The amendment was issued in 2020 to help lessees in treating covid-19 related rent reductions in its books of accounts.
The amendment was originally issued by the IASB in May 2020 with the main purpose of helping lessees for accounting coronavirus related rent reductions, such as rent holidays and temporary rent concessions, while continuing providing useful information regarding their leases to investors.
The practical relief is currently applicable to rent concessions that reduce amount of lease payments due on or prior to June 30, 2021.
The proposal would apply the amendment for financial periods beginning on or after April 1, 2021.
As a direct response to calls made by stakeholders, and because the pandemic is still in its full force, the IASB has proposed to extend the relief covering rent reductions that reduce lease payments due on or prior to June 30, 2022.
Earlier application is allowed, including in financial statements that are yet to be authorized for issue at the date the amendment is issued. It will also be possible to apply the amendment retrospectively, recognizing the cumulative impact of initially applying the amendment as an adjustment to the opening retained earnings (or any other equity component, as appropriate) at the start of the financial period in which the lessee first applies for the amendment.
The comment period for this consultation is days due to the urgent nature of the proposal.
The deadline for submitting comments and feedback with regards to the said consultation is February 25, 2021.