As a result of Covid-19 companies are reimagining the role of the “office” and the future of the workplace under a “next” normal. There is an expectation that we will see a continuation of remote working and re-evaluation of what work gets done where. This is causing executive management to rethink their leasing strategies which in turn impacts lease accounting and the associated disclosure requirements. We see many companies renegotiating lease agreements, securing rent concessions and deferrals, downsizing leased space, sub-leasing excess space or abandoning excess space that cannot be sub-let.
Accounting for these lease revisions can be complicated. CFO’s need to make sure that the correct accounting treatment is being followed and that their disclosure reporting provides the users of their financial statements with an adequate understanding of the impact of renegotiated leases along with other Covid-19 related lease and real estate impacts.
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