Lease Incentives (Amendment to Illustrative Example 13 accompanying IFRS 16)

The Board uses annual improvements to produce efficiently a collection of unrelated minor amendments to IFRS Standards. Rather than separately publishing a series of piecemeal changes, the publication of the proposals in a single Exposure Draft streamlines the Standard-setting process, with benefits both for stakeholders and for the Board.

The Board was informed about the potential for confusion in applying IFRS 16 Leases because of how Illustrative Example 13 accompanying IFRS 16 had illustrated the requirements for lease incentives. Before the amendment, Illustrative Example 13 had included as part of the fact pattern a reimbursement relating to leasehold improvements; the example had not explained clearly enough the conclusion as to whether the reimbursement would meet the definition of a lease incentive in IFRS 16. The Board decided to remove the potential for confusion by deleting from Illustrative Example 13 the reimbursement relating to leasehold improvements.