Options to record Holdover or Month to Month Agreements
There may be times when you're yet to negotiate a new term with your landlord and you enter into Holdover or change your lease term to be Month to Month. These periods can be for an unknown period of time and may change the way you're accounting for an Agreement under IFRS 16. You can either represent these periods by:
- Option One: Extending your existing Agreement for the anticipated Holdover or Month to Month period/s; or
- Option Two: Expiring your existing Agreement at its pre-scheduled Expiry Event or Renewal Event, creating a new Agreement to reflect the anticipated Holdover or Month to Month period/s, and if a new term is negotiated, creating another new Agreement to represent those new terms
We appreciate that neither of these methods are ideal, but unfortunately every organisation's Holdover/Month to Month setups seem to be different, so formulating a solution is inherently complex. We're reviewing what we can do to make this easier for you - so please watch this space!
The pros and cons of each option
Due to the complexity of representing Holding Over or Month to Month arrangements, we recognise that each option has pros and cons. We recommend reviewing these before you select which option to use.
Pros | Cons | |
Option One |
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Option Two |
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Decided to extend your Agreement for the Holdover or Month to Month period?
Check out this article for the steps and more information on Option One.
Decided to create a new Agreement for your Holdover or Month to Month period?
Check out this article for the steps and more information on Option Two.
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