The amendments require disclosures that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. To the extent necessary to achieve this objective, the IASB requires that the following changes in liabilities arising from financing activities are disclosed): (i) changes from financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other businesses; (iii) the effect of changes in foreign exchange rates; (iv) changes in fair values; and (v) other changes.
The amendments state that one way to fulfill the new disclosure requirements is to provide a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities. This is a departure from the December 2014 exposure draft that had proposed that such a reconciliation should be required.
Finally, the amendments state that changes in liabilities arising from financing activities must be disclosed separately from changes in other assets and liabilities.
Dissenting opinion
One Board member voted against the publication of the amendments as this Board member believes that (i) the amendments may provide incomplete information about an entity’s management of liquidity, (ii) the amendments do not meet the needs of users of financial statements, and (iii) the costs of preparing the disclosure will be considerable and may outweigh the benefits.
Effective date and transition requirements
The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. Since the amendments are being issued less than one year before the effective date, entities need not provide comparative information when they first apply the amendments.
Additional information
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