The International Accounting Standards Board (IASB) has issued an amendment to defer by one year the effective date of Classification of Liabilities as Current or Non-current, which amends IAS 1 Presentation of Financial Statements
Classification of Liabilities as Current or Non-current was issued in January 2020, effective for annual reporting periods beginning on or after 1 January 2022. However, in response to the Covid-19 pandemic, the Board has deferred the effective date by one year to provide companies with more time to implement any classification changes resulting from those amendments.
The changes are intended to provide a more general approach to the classification of liabilities under IAS based on the contractual arrangements in place at the reporting date.
The amendments aim to help companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity.
Classification of Liabilities as Current or Non-current is now effective for annual reporting periods beginning on or after 1 January 2023.
The board did not make any other changes to the standard besides the deferral of the effective date.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) is here.
By Pat Sweet