IAS 32 – Puttable financial instruments
This IASB project considered the need for creating an exception to the liability classification in IAS 32 Financial Instruments: Presentation for shares that evidence a residual interest in the assets of an entity and that are puttable to the entity at fair value. Without an amendment, IAS 32 would require these instruments to be classified as liabilities.
The Board noted that the application of IAS 32 to financial instruments puttable at fair value gives rise to anomalous accounting because, assuming that the fair value of the entity is higher than the entity's net asset value, the balance sheet will always show net liabilities, and those net liabilities will increase the better the entity performs.
Current status of the project
This project has been completed. The IASB issued Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1) on 14 February 2008.
|22 June 2006||Exposure Draft Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation published||Comment deadline 23 October 2006|
|14 February 2008||Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1) issued||Effective for annual periods beginning on or after 1 January 2009|