2020 AICPA Conference on Current SEC & PCAOB Developments . The new standard could also impact entities beyond accounting, as discussed on the next … Each one focuses on a particular aspect and includes explanations of the requirements and examples showing them in practice, to help you apply the new standard. KPMG addresses how to account for rent concessions resulting from these events under ASC 842 as a lessee or a lessor. Filed under: Leases. $300,000: 12 years. Digital Self-Studies. We provide detailed Q&As, examples and observations, as well as comparisons to legacy US GAAP, updated for continuing developments in practice. However, KPMG has put together practical guidance and examples to help lessors account for rent concessions treated as lease modifications in our publication Leases – Rent concessions. And the impact of the COVID-19 coronavirus pandemic has meant that landlords have been dealing with unprecedented levels of defaults, rent concessions and other lease modifications. If the lessee decides to apply this exemption each lease component and any associated non-lease component is accounted for as a single lease component. According to IFRS 16, lease modification is a change in either scope or payments for the lease that was not part of the original conditions. Changes in estimates or circumstances do not give rise to a new classification of a lease (IFRS 16.66). Publications Financial Reporting Developments. A lease modification is defined as a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease. 8 Lease modifications 40. Lease classification is reassessed only if there is a lease modification. KPMG reports on the … All other lease modifications. Topics Leases. Lease modifications may also prompt remeasurement of the lease liability unless they are to be treated as separate leases. Link copied Overview. Relevant dates. 15 Dec 2020 PDF. Example 1 . The increase in liability of $291,000 is adjusted against the ROU asset, resulting in a ROU asset of $512,000. In-depth application guidance on the new leasing standard. IASB ® Board project Phase I: pre-IBOR reform issues. Lease modifications for lessees. This guide was fully updated in October 2020. A lease modification (as considered in this document – does not address changes in the leased asset, such as decreases in leased space) arises when the lease contract is altered such that future cash flows and/or the scope of the lease changes. Subscribe to our IFRS Perspectives Newsletter . A lease modification includes adding or Applicability. That model was criticised for failing to meet the needs of investors and analysts because it did not always provide a faithful representation of leasing transactions. The IASB Board has a two-phase project to assist in a smoother transition away from IBOR. KPMG's new publication will help companies understand accounting under IFRS 16 for common forms of lease modifications. Find out more Our Real estate leases – The landlord perspective (PDF 1.4 MB) publication covers key areas of IFRS 16 that are particularly relevant to landlords in real estate leases. Under the new standard, other accounting changes include accounting for sub-leases, lease modifications, and sale and leaseback arrangements. This publication offers guidance on accounting under IFRS 16 for common forms of lease modifications. Discounts Available for Groups of 3 or More! Guidance for lessors remains substantially unchanged from IAS 17. Finally, IFRS 16 contains additional application guidance on how to deal with periods covered by options to extend or terminate a lease. In depth s g t s k s s IFRS 16 implications for lessors in the real estate industry PwC 1 IFRS 16, ‘Leases’, will be effective for annual reporting periods beginning on or after 1 January 2019. PwC’s Leases guide is a comprehensive resource for lessees and lessors to account for leases under the new leases standard (ASC 842). Individuals who register for any 2 KPMG Executive Education virtual seminars can save! [IFRS 16:36(c)] Covid-19-related rent concessions A lessee may elect not to assess whether a COVID-19-related rent concession is a lease modification. Recognition of lease income. Related content. In its final public meeting on the leases project, the IASB agreed on the effective date of the new standard and cleared five sweep issues identified during the drafting process. ROUA: $200,000. IAS 17 prescribes the accounting policies and disclosures applicable to leases, both for lessees and lessors. * For more information, call 201-505-6062 or email us-kpmglearning@kpmg.com. This webinar, hosted by KPMG Partner Patricia Stebbens, … $1,100,000: $800,000. Latest edition: In this handbook, KPMG explains the new leases standard (ASC 842) in detail. Financial Reporting Developments - Lease accounting - Accounting Standards Codification 842, Leases. KPMG reports on new SEC staff guidance on updating the foreign exchange rate used to remeasure an ROU asset into the lessee’s functional currency. IFRS Newsletter: Leases. Secondly, the length of the lease term determines whether a lease qualifies for the short-term lease exemption. Lessees and lessors receiving rent concessions resulting from coronavirus (COVID-19), the civil unrest in Hong Kong and other unforeseen events. I teach accounting for the lease modifications in the IFRS Kit and believe me, it is not an easy thing, especially if the lessee has many leases. Read more. 10.1 Data extraction challenges 49 10.2 Key transition decisions for tenants 50 10.3 Sale-and-leaseback on transition 53. b) Otherwise, the lessor should apply the requirements of Ind AS 109, Financial Instruments. provides an overview of the IASB discussions of the leases project in October 2015. • Negotiate to add the right to use an additional asset • Negotiate to increase the lease term • Negotiate to terminate the lease • Negotiate to change the consideration At the effective date of the modification, the lease liability is remeasured to include the lease payments for the extended period (2020 to 2025). lease components (services) from lease components. By the end of this module you will be able to determine what is a lease modification, identify whether a modification is a separate lease or whether it is an adjustment to an existing lease and apply lease modification accounting. For example, the lessee may be required to recalculate lease liabilities using a revised discount rate and adjust right-of-use assets. Modifications is a particular area which has raised issues and the devil is in the detail. 1000. 8.1 Increase in leased space – Adding a floor 40 8.2 Increase in lease term 41 8.3 Reduction in rent 43 8.4 Compensation for inconvenience 45. KPMG’s global IFRS leasing standards leader. To support the new recognition and measurement requirements, changes to information technology systems and data gathering processes may be required. KPMG Executive Education. Harder by the pandemic than others * for more information, call 201-505-6062 or us-kpmglearning... 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