Classification Of Liabilities Should Be Classified As Either Current Or Non Current?

1249 Words May 17th, 2015 5 Pages
INTRODUCTION
In IASB Exposure Draft ED/2015/1 (AASB equivalent is ED 259), Classification of Liabilities (Proposed Amendments to IAS 1) there are proposal for several changes how liabilities should be classified as either current or non-current in financial statements.
Changes proposed by the ED
1. The IASB proposes clarifying that the classification of liabilities as either current or non-current should be based on the entity’s rights at the end of the reporting period which are
(a) replacing ‘discretion’ in paragraph 73 of the Standard with ‘right’ to align it with the requirements of paragraph 69(d) of the Standard; (b) making it explicit in paragraphs 69(d) and 73 of the Standard that only rights in place at the reporting date should affect this classification of a liability; and
(c) deleting ‘unconditional’ from paragraph 69(d) of the Standard so that ‘an unconditional right’ is replaced by ‘a right’.
2. The amendments also proposed to explain the link between the settlement of a liability and the outflow of resources from the entity by adding to paragraph 69 of IAS 1 that settlement refers to the ‘transfer to the counterparty of cash, equity instruments, other assets or services’.
3. The IASB also proposes to reorganize the guidance in the Standard so that similar examples are grouped together to distinguish between circumstances that do affect the rights in existence at the reporting date, and those that do not.
DETAILED ELABORATION OF THE CHANGES

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