As promised at their meeting early this week, the Financial Accounting Standards Board has issued a staff Q&A addressing how lease concessions related to COVID-19 should be treated from an accounting perspective.
With the sheer volume of lease contracts for which concessions related to the effects of COVID-19 likely will be granted, the staff notes that the guidance did not contemplate concessions being executed so rapidly.
The Q&A indicates that an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 and Topic 840 to those contracts.
FASB STAFF Q&A: “Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic”
