CTHRepealedLegislation
Accounting Standard AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2
Amendments to AASB 16 LeasesAmendments to AASB 16 Leases
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Amendments to AASB 16 Leases
| Paragraphs 104–106, C1B and C20C–C20D are added. A heading is added before paragraph 104 and a subheading is added before paragraph C20C. For ease of reading these paragraphs have not been underlined. |
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Temporary exception arising from interest rate benchmark reform
104 A lessee shall apply paragraphs 105–106 to all lease modifications that change the basis for determining future lease payments as a result of interest rate benchmark reform (see paragraphs 5.4.6 and 5.4.8 of AASB 9). These paragraphs apply only to such lease modifications. For this purpose, the term ‘interest rate benchmark reform’ refers to the market-wide reform of an interest rate benchmark as described in paragraph 6.8.2 of AASB 9.
105 As a practical expedient, a lessee shall apply paragraph 42 to account for a lease modification required by interest rate benchmark reform. This practical expedient applies only to such modifications. For this purpose, a lease modification is required by interest rate benchmark reform if, and only if, both of these conditions are met:
(a) the modification is necessary as a direct consequence of interest rate benchmark reform; and
(b) the new basis for determining the lease payments is economically equivalent to the previous basis (ie the basis immediately preceding the modification).
106 However, if lease modifications are made in addition to those lease modifications required by interest rate benchmark reform, a lessee shall apply the applicable requirements in this Standard to account for all lease modifications made at the same time, including those required by interest rate benchmark reform.
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Effective date
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C1B AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2, which amended AASB 4, AASB 7, AASB 9, AASB 16 and AASB 139, issued in September 2020, added paragraphs 104–106 and C20C–C20D. An entity shall apply these amendments for annual reporting periods beginning on or after 1 January 2021. Earlier application is permitted. If an entity applies these amendments for an earlier period, it shall disclose that fact.
Transition
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Interest Rate Benchmark Reform – Phase 2
C20C An entity shall apply these amendments retrospectively in accordance with AASB 108, except as specified in paragraph C20D.
C20D An entity is not required to restate prior periods to reflect the application of these amendments. The entity may restate prior periods if, and only if, it is possible without the use of hindsight. If an entity does not restate prior periods, the entity shall recognise any difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period that includes the date of initial application of these amendments in the opening retained earnings (or other component of equity, as appropriate) of the annual reporting period that includes the date of initial application of these amendments.