Global Standards for the world economy

Thursday 27 April 2017

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Financial instruments with characteristics of equity

Meeting summaries and observer notes

 IASB / FASB December 2009



This session was held jointly with the FASB.

The boards continued to discuss a classification approach for financial instruments with characteristics of equity. The Boards tentatively decided:

  • Not to change the current reporting requirements for instruments currently accounted for in accordance with FASB Accounting Standards Codification� Topic 718, Stock Compensation, and IFRS 2 Share-based Payment, regardless of any other decisions in this project.
  • To report on the statement of financial position physically settled forward purchase contracts as offsetting debit and credit instruments. The credit instrument would be a liability for the total future payment discounted to its present value using a market interest rate that the issuer would have had to pay if it had issued a cash-settled debt instrument with similar term to maturity. That liability would be reported at accreted cost. The debit would be reported as an offset to equity, but the Boards did not decide whether the offset would be considered a reduction in the number outstanding shares.
  • To continue to consider principles or exceptions for determining which types of share-settled instruments would be classified as equity.

Date: 12/16/2009