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Welcome you to IFRS 16 Latest developments, a snapshot of the recent amendments to IFRS 16 Leases, as well as some other relevant topics.
Lessees may elect to apply a practical expedient if the rent concession meets the following criteria. In this case, lessees won’t have to assess whether the rent concession is a modification and won’t have to apply modification accounting.
The International Accounting Standards Board (“IASB”) published Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7 representing the finalisation of Phase II of the project on 27 August 2020 to address issues that might affect financial reporting when an existing interest rate benchmark is replaced with an alternative benchmark interest rate, i.e. replacement issues.
The accounting issues arising before an existing interest rate benchmark is replaced with an alternative risk-free rate, i.e. pre-replacement issues, have been considered previously by the IASB and were addressed in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7), published in September 2019 (“Phase I amendments”). This Phase I amendments provide temporary exceptions to specific hedge accounting requirements, to avoid entities having to discontinue hedging relationships solely due to the uncertainty arising from the reform.
The Phase II amendments discussed in the following slides compliment, do not supersede, the Phase I amendments. The Phase II amendments apply to all entities and are not optional and effective for annual periods beginning on or after 1 January 2021 with early application permitted. The amendments are applied retrospectively and include the potential reinstatement of hedge relationships that were discontinued solely due to changes directly required by the reform.