Ignore Lease Rental Holidays, Global Accounting Board Says

Companies can ignore lease rental holidays forced by the coronavirus outbreak for accounting purposes, under proposals published Friday by global standard setters.

The International Accounting Standards Board accepted that the number of lease rental holidays being granted as companies stop operations during the pandemic made it too burdensome for companies to record them as lease modifications, as required by International Financial Reporting Standard 16 Leases.

• “Applying those requirements to a potentially large volume of Covid-19-related rent concessions could be practically difficult, especially in the light of the many challenges stakeholders face during the pandemic,” the IASB said in a statement.
• Under IFRS 16, companies must decide if rental holidays constitute a modification for each individual lease and reassess their lease liability if so. Under the proposed changes this requirement would be waved for lease holidays given in 2020. Board members had approved the measure earlier in April.
• The IASB is putting the change on a fast timetable, seeking feedback by May 8 and planning to make the measure effective that same month.