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18 Jun. 2020

AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions

AASB 16 Leases has been amended to provide a practical expedient that permits lessees not to assess whether rent concessions that occur as a direct consequence of the covid-19 pandemic and meet specified conditions are lease modifications.

Instead, a lessee would account for those rent concessions as if they were not lease modifications.

AASB 2020-4 applies to annual periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not authorised for issue at the date this Standard was issued (15 June 2020).

The Standard amends AASB 16 to:

(a) provide lessees with an optional practical expedient regarding assessing whether a Covid-19-related rent concession is a lease modification;

(b) require lessees that apply the practical expedient to account for Covid-19-related rent concessions as if they were not lease modifications;

(c) require a lessee that applies the practical expedient to disclose that it has applied the practical expedient to all rent concessions that meet the conditions, or if not applied to all such rent concessions, information about the nature of the contracts to which it has applied the practical expedient;

(d) require lessees applying the practical expedient to disclose the amount recognised in profit or loss to reflect changes in lease payments that arise from Covid-19-related rent concessions;

(e) require lessees to apply the practical expedient retrospectively at the start of the reporting period in which the expedient is first applied; and

(f) not require lessees to disclose the information required by paragraph 28(f) of AASB 108 in the reporting period in which the practical expedient is first applied.