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.

SPONSORED REPORT

Tax reform changes are now in effect

With all the recent tax law changes, this year it’s more important than ever to make sure your clients’ tax situations are squared away before year end. This report provides necessary guidance to ensure 2019 starts without a hitch.

PODCAST

Using drones to enhance audits

Hermann Sidhu, CPA, global assurance digital leader at EY, walks us through EY’s exciting new project to use drones to help audit large warehouses and outdoor inventories.