Category Archives: Covid-19

AMENDMENT TO IFRS 16 FOR COVID-19 RELATED RENT CONCESSIONS

Amendment to IFRS 16 For Covid-19 Related Rent Concessions|KudosPrs

Amendment to IFRS 16 For Covid-19 Related Rent Concessions

  • The IASB considered a “Practical expedient” to PROVIDE RELIEF for LESSEES (not for LESSORS) from lease modification accounting for Rent Concessions, in the form of Rent Holidays or Rent concessions for an agreed timeframe.
  • Amendment to IFRS 16 – Leases: Issued in May 2020.
  • Applicable for annual reporting periods beginning on or after June 1, 2020.
  • Early application is permitted, including in financial statements not authorized for issue at February 28, 2020.
  • Rent concession received by lessees should be a direct result of Covid-19 pandemic. “Practical expedient” allows LESSEES to elect NOT to carry out an assessment to decide WHETHER a Covid-19 Related Rent Concession is a Lease Modification or not.
  • Three conditions for applying “Practical expedient”
    • Consideration for the lease being substantially the same or less than the original consideration immediately before the concession;
    • Concession relief for lease payments originally due on or before June 30, 2021; (if the reductions in lease payments extend beyond June 30, 2021, the rent concession in its entirety would not be within the scope of the practical expedient) and
    • No substantial change to other terms and conditions of lease contract.
  • A lessee shall apply retrospectively, as an adjustment to the opening retained earnings or other component of equity, as appropriate at the beginning of annual reporting period in which the lessee first applies the amendment.
  • Disclosure requirements:
    • Application of the practical expedient
    • Amount recognized in statement of comprehensive income

POST COVID-19

Post covid-19 world kudos p

  • Corporate world will change for ever.
  • The effect of damage in the financials will last for longer period even after
    normalization.
  • Businesses without big financial muscles will collapse if pandemic continues even for a shorter period.
  • Any failure or bankruptcy of any giant businesses will have far fetched consequences in SME economy.
  • The austerity measures for economic revival by governments should reach
    at every level of economy in order to check deflation.
  • Flexibility in payment terms by financial institutions, support by Govt. Agencies will be a relief for ailing companies due to lockdown.
  • Work at home so far was only a western work culture. But it will become popular in many other countries too.
  • There will be surge in outsourcing services and IT services businesses.
  • IT business will be major beneficiaries as online business, on line payment
    and on line education will be the future everywhere in the world.
  • Major investments expected in health care especially in primary health centers.
  • Importance will be given for Medical research institutions.
  • There will be rethinking on present strategy of concentrating retail businesses in large malls and hence It may move back to decentralized market as it was earlier.

  • Accounting Wise, the market corrections will happen and therefore assets will get accounted at their fair value either through impairment or write off because of obsolescence.
  • Intangible assets like goodwill have major impact during market corrections.
  • Going concern depends on lots of factors. The main factor is the investors’ ability to contribute to the business.

Post Covid Social Life Too Will Change.

The world will not be same again in post covid era.
But BIG QUESTION Everyone Wonders
 
“WHEN THIS DEADLY COVID VIRUS’ GLOBAL MARCH WILL END ?”