EC Amends Regulation on IFRS 16 in Response to COVID-19 Crisis
EC published Regulation 2020/1434 on the IFRS 16 standard on leases. Regulation 2020/1434 amends Regulation 1126/2008 adopting certain international accounting standards in accordance with the Regulation 1606/2002. Annex to the Regulation 2020/1434 details amendments to IFRS 16 with respect to the rent concessions related to the COVID-19 event. Each company shall apply these amendments, at the latest, as from June 01, 2020 for financial years starting on or after January 01, 2020. Considering the urgency of this operational relief related to the COVID-19 event, Regulation 2020/1434 shall enter into force on the day following that of its publication in the Official Journal of the European Union.
In May 2020, IASB had published COVID-19-related rent concessions (amendment to IFRS 16). The amendment to IFRS 16 provides optional, temporary COVID-19-related operational relief for lessees benefitting from lease payments holidays without undermining the relevance and usefulness of financial information reported by companies. Following a consultation with the European Financial Reporting Advisory Group, EC concluded that the amendments to IFRS 16 meet the criteria for adoption set out in Article 3(2) of Regulation No 1606/2002. IASB set the effective date of the amendments to IFRS 16 from June 01, 2020. Therefore, the provisions of Regulation 2020/1434 shall apply retroactively to ensure legal certainty for the concerned issuers and to ensure consistency with other accounting standards laid down in Regulation No 1126/2008. Therefore, Regulation 1126/2008 has been amended accordingly.
Related Link: Regulation 2020/1434
Effective Date: October 13, 2020
Keywords: Europe, EU, Banking, Securities, COVID-19, IFRS 16, Leases, Payment Holiday, Regulation 2020/1434, Lease Concessions, IASB, EC
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