cancel

Moving to hybrid working

Is your leased office space impaired?

(This article was published on 27 July 2021 and updated on 31 October 2023)

What’s 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.

Volker Specht

Partner, Audit, DPP

KPMG in Germany

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 ‘Insights’ mean our publication Insights into IFRS®

Download

Testing leased office space for impairment

Read our publication