IASB issues amendments to IAS 1 clarifying the classification of liabilities as current or non-current

The IASB has issued amendments to IAS 1, which are intended to clarify the requirements that an entity applies in determining whether a liability is classified as current or non-current. The amendments are intended to be narrow-scope in nature and are meant to clarify the requirements in IAS 1 rather than modify the underlying principles.

The amendments include clarifications relating to:

·        How events after the end of the reporting period affect liability classification;

·        What the rights of an entity must be in order to classify a liability as non-current;

·        How an entity assesses compliance with conditions of a liability (e.g. bank covenants); and

·        How conversion features in liabilities affect their classification.

The amendments are effective for years beginning on or after 1 January 2022, with earlier application permitted.

The article discussing the amendments can be accessed here. BDO will issue an IFR Bulletin on the amendments in due course