Released 19 November 2021
The International Accounting Standards Board (IASB) has proposed narrow-scope amendments to IAS 1 Presentation of Financial Statements to improve the information companies provide about long-term debt with covenants.
The proposed amendments would specify that, in such a situation, covenants would not affect the classification of a liability as current or non-current at the reporting date. Instead, a company would:
•present non-current liabilities that are subject to covenants on the statement of financial position separately from other non-current liabilities; and
•disclose information about the covenants in the notes to its financial statements, including their nature and whether the company would have complied with them based on its circumstances at the reporting date.
The IASB expects that these proposals will improve the information a company provides about non-current liabilities with covenants by enabling investors to assess whether such liabilities could become repayable within 12 months.
Comments for the Exposure Draft Non-current liabilities with Covenants are requested by 21 March 2022.
More information can be found at: https://www.ifrs.org/news-and-events/news/2021/11/iasb-proposes-narrow-scope-amendments-to-ias-1/.