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Current stage

The International Accounting Standards Board (Board) tentatively decided to explore making clarifying amendments to IAS 32 Financial Instruments: Presentation to address common accounting challenges that arise in practice when applying IAS 32. The Board aims to address those challenges by clarifying some underlying principles in IAS 32 and adding application guidance to facilitate consistent application of those principles. In addition, it intends to further develop some presentation and disclosure requirements. The Board’s tentative decisions were made after considering feedback on the Discussion Paper Financial Instruments with Characteristics of Equity, which was published in June 2018.

The Discussion Paper set out the Board's preferred approach to classification of a financial instrument, as a financial liability or an equity instrument, from an issuer’s perspective. The Board also explored enhanced presentation and disclosure requirements that would provide further information about financial instruments’ effects on an issuer's financial position and financial performance.

IASB® Update February 2021

The Board met on 16 February 2021 to discuss:

  • potential refinements to the disclosures an entity would be required to make about the financial instruments it issues; and
  • the classification of financial instruments with obligations that arise only on liquidation.

Disclosures: potential refinements (Agenda Papers 5A–5D)

The Board discussed potential refinements to disclosure proposals explored in its 2018 Discussion Paper Financial Instruments with Characteristics of Equity—namely, proposals for information about priority on liquidation, potential dilution, and terms and conditions. 

The Board was not asked to make any decisions but directed the staff to further consider the objectives of the proposed disclosures and their scope. 

Obligations that only arise on liquidation of the entity (Agenda Papers 5E–5F)

The Board discussed challenges in accounting for financial instruments with obligations that arise only on liquidation of an entity. The Board also discussed potential classification, presentation and disclosure requirements to address those challenges.

The Board tentatively decided not to change how such instruments should be classified; but instead to develop presentation and disclosure requirements in relation to them.

Twelve of 13 Board members agreed with this decision.

Next milestone

Exposure Draft


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