Hot Topic | April 2020



Accounting for coronavirus-related rent concessions

Updated: Applying ASC 842 to rent concessions arising from COVID-19 and other recent events.

Scott Muir

Scott Muir

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5073

Andrew Mock

Andrew Mock

Senior Manager, Dept. of Professional Practice, KPMG US

+1 212-954-3522

Updated: Lessees are receiving rent concessions from their landlords to lessen the economic burden of temporary closures and other measures resulting from coronavirus (COVID-19) and civil unrest in Hong Kong. KPMG addresses how to account for rent concessions resulting from these events under ASC 842 as a lessee or a lessor.


Lessees and lessors receiving rent concessions resulting from coronavirus (COVID-19), the civil unrest in Hong Kong and other unforeseen events.

Relevant dates

Effective date Public entities All other entities

Annual periods – Fiscal years beginning after      

December 15, 2018

December 15, 2020

Interim periods – In fiscal years beginning after

December 15, 2018

December 15, 2021

Early adoption allowed in fiscal years beginning after




Key impacts

Accounting for these rent concessions under ASC 842 depends on the enforceable rights and obligations of the parties under the original lease contract.

This includes those arising from the laws of the jurisdiction governing the lease even if not written in the contract, and the nature of any changes agreed by the parties to the terms and conditions of that contract.

  • If a rent concession under these circumstances is required by the original lease contract (e.g. by a force majeure clause), the concession will generally be accounted for as a variable lease payment.
  • If the lessor is under no obligation to grant a rent concession, the lessor’s agreement to grant one should be accounted for as a lease modification.

Report contents

  • Background and key impacts
  • Applicability
  • Variable lease payments or lease modification?
  • Accounting for the rent concession
  • Short payment of rent

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