FRED 78 proposes that requirements originally introduced into FRS 102 and FRS 105 in October 2020 apply to rent concessions that reduce only lease payments originally due on or before 30 June 2022, provided the other conditions for applying the requirements are met.
As pandemic restrictions continue, extending the existing time condition is considered necessary to ensure these concessions are accounted for consistently and in a way that best reflects their substance.
Consideration was also given to the risk of the treatment being applied too broadly as a result of extending the time condition. It was concluded that the frequency with which temporary Covid-19 related rent concessions are likely to be granted may decline in the future as pandemic restrictions are lifted, and that the other criteria for applying the requirements also mitigate this risk.
The amendments are proposed to be effective for accounting periods beginning on or after 1 January 2021, with early application permitted.
The FRC expects to finalise these amendments in the first half of the year.
The consultation on FRED 78 closes for comment on 11 May 2021.