Covid-19-related rent concessions

Learning objectives

• Explain the temporary practical expedient for COVID-19-related rent concessions and its conditions, now of limited application.L3

Normative references

• IFRS 16 §46AAs a practical expedient, a lessee may elect not to assess whether a rent concession that meets the conditions in paragraph 46B is a lease modification; if it makes this election, it accounts for any change in lease payments resulting from the rent concession the same way it would account for the change applying IFRS 16 if the change were not a lease modification.
• IFRS 16 §46BThe practical expedient applies only to rent concessions occurring as a direct consequence of the COVID-19 pandemic that meet all of the following conditions: (a) the revised consideration is substantially the same as, or less than, the consideration immediately preceding the change; (b) any reduction affects only payments originally due on or before 30 June 2022; (c) there is no substantive change to other terms and conditions.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

4 questions

• In 2023, Novalis obtains from its lessor a reduction of the payments due from July to December 2023, presented as a lasting consequence of the Covid-19 pandemic. Novalis may apply the practical expedient for Covid-19-related rent concessions and dispense with assessing whether this concession is a lease modification.L3
• Historical reminder. In 2021, four lessees of the Brisane group obtained the following rent concessions from their lessors as a direct consequence of the Covid-19 pandemic. Which one met all the conditions of the practical expedient then applicable?L3
• Historical reminder. In 2020, the lessee Tamaris obtained a rent concession that met all the conditions of the practical expedient for Covid-19-related rent concessions, and it elected to apply it. Which description of this expedient is accurate?L3
• Historical reminder. In its 2021 financial statements, the lessee Glycine applied the practical expedient for Covid-19-related rent concessions (applicable only to payments originally due on or before 30 June 2022). What information did it have to disclose in this respect? (several answers)L3