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To exempt pre-existing arrangements from subsequent more restrictive laws or regulation.

Grandfathering may be applied for the full natural life of pre-existing arrangements, or for a more limited period which is considered long enough to allow new and compliant arrangements to be put in place.

2. Financial reporting

To continue a previous financial accounting treatment - where permitted - for pre-existing contracts or transactions, during a transition period.

For example, the introduction of IFRS 16 (Leases) allows pre-existing leases to continue be accounted for under the previous accounting regime, applying the new rules only to new contracts.

See also