IASB proposal would clarify how entities classify a liability

By Ken Tysiac

The International Accounting Standards Board (IASB) issued a proposal Tuesday that is intended to clarify how entities classify debt, particularly when it is coming up for renewal.

The proposal is designed to improve presentation in financial statements by clarifying the criteria for the classification of a liability as either “current” or “non-current.” The proposed amendments would accomplish this by:

  • Clarifying that the classification of a liability as either “current” or “non-current” is based on the entity’s rights at the end of the reporting period, and
  • Clearly describing the link between the settlement of the liability and the outflow of resources from the entity.

The proposed amendments are contained in the exposure draft Classification of Liabilities (Proposed Amendments to IAS 1). The IASB is seeking comments, which can be made at the board’s website.

An initiative identified and considered by the IFRS Interpretations Committee was the source of the proposal.

Ken Tysiac is a JofA editorial director.

FEATURE

Tackling TCJA changes this tax season

Return preparers must be ready for how the Tax Cuts and Jobs Act has modified many common features of individual and business returns.

PODCAST

Why CPAs can’t wait on automation tools

What do accounting firms waiting on others to develop AI, automation, and data analytics tools have in common with a baseball fan sitting in a stadium filling with water at an exponential rate? The answer could determine your firm’s fate.