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Generally apart from break clauses (usually midway through a lease) companies are liable for the full lease cost and can't give early notice for termination. I
by theonlybutlet 3y ago
Generally apart from break clauses (usually midway through a lease) companies are liable for the full lease cost and can't give early notice for termination.
In accounting terms, leases according to IFRS 16 are recognized as a lease liability and a contra right of use asset for the full term of the lease.
I'm not 100% certain on the rationale of an impairment (as it could be construed as no longer useful) but if these companies aren't using these properties, auditors may force them to impair their leases, meaning large write offs and accounting losses.
- worrycue 3y agoWon't they just do whatever is most profitable? If continuing to pay even if you aren't using the estate is more profitable that's what they will do - they can still let employees work from home; would save on the air conditioning and lighting bill.
- theonlybutlet 3y agoYeah, it's not so much the lease liability that's the issue. It's the right of use asset that was recognized. It's a book loss, not impacting actual cash flow. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2021/07/impairment-rou-assets-talkbook.pdf https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2021/07/impa...