(This article was published on 27 July 2021 and updated on 31 October 2023)
What鈥檚 the issue?
Following a change in working practices and an increase in home- and hybrid-working models, some tenants are looking to either exit or renegotiate their real estate leases.
Deciding to vacate or sub-let office space potentially indicates impairment, so companies need to assess the potential impacts for their financial reporting.
Getting into more detail
Changes in the expected use of office space could have significant accounting consequences. For example, the right-of-use (ROU) asset in a lease arrangement could be impaired or there could be a change in its estimated useful life.
Actions for management
Companies need to assess the potential impacts for their financial reporting, because a decision to vacate or sub-let property is a potential indicator of impairment.
To help with this assessment, we provide insight and practical guidance in our guide to Testing leased office space for impairment, using ten key questions that companies might ask.
References to 鈥業nsights鈥� mean our publication聽Insights into IFRS庐
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