Related Discussions

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• May 24, 2021

• At its meeting on May 24-27, 2021, the IASB met to continue discussing potential refinements to its proposals for the disclosure of information about priority on liquidation. The Board discussed proposals to require two new types of disclosures, namely (i) disclosure of the nature and priority of claims against an entity; and (ii) disclosure of terms and conditions about priority on liquidation for particular financial instruments. (The requirements would, if finalized, be incorporated into IFRS 7, Financial Instruments: Disclosures.) The Board made tentative decisions in this regard and will continue its discussions on other topics included in the project plan discussed at its October 2019 meeting.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Apr 27, 2021

• At its meeting on April 27-28, 2021, the IASB met to continue its discussions on potential refinements to disclosure proposals explored in its 2018 Discussion Paper Financial Instruments with Characteristics of Equity—namely, proposals for disclosure of information about terms and conditions, priority on liquidation and potential dilution. These disclosure proposals relate to financial instruments an entity issues and, if finalized, would be incorporated into IFRS 7 Financial Instruments: Disclosures. The Board made a number of tentative decisions and will continue to discuss disclosures for information about priority on liquidation and other topics included in the project plan discussed at the October 2019 Board meeting.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Feb 16, 2021

• At its meeting on February 16-17, 2021, the IASB met and discussed (i) potential refinements to the disclosures an entity would be required to make about the financial instruments it issues; and (ii) the classification of financial instruments with obligations that arise only on liquidation. The Board will continue to discuss these topics at a future meeting.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Dec 14, 2020

• At its meeting on December 14-16, 2020, the IASB met to discuss whether to move the Financial Instruments with Characteristics of Equity project from the research program to the standard-setting program. The Board decided to: (i) add the Financial Instruments with Characteristics of Equity project to its standard-setting program; and (ii) continue using the expertise of advisory bodies instead of establishing a dedicated consultative group for the project. At future Board meetings, the Board will continue discussing topics included in the project plan that were discussed at the October 2019 Board meeting.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Apr 21, 2020

• At its meeting on April 21-23, 2020, the IASB continued its discussions on how to clarify the principles for classifying financial instruments settled in an entity’s own equity instruments. The Board tentatively decided, as a foundation principle, that for a derivative on own equity to meet the fixed-for-fixed condition in IAS 32, the number of functional currency units to be exchanged with each underlying equity instrument must be fixed or only vary with: (a) allowable preservation adjustments; or (b) allowable passage of time adjustments. The Board also tentatively decided to classify as equity a contract that can be settled by exchanging a fixed number of non-derivative own equity instruments with a fixed number of another type of non-derivative own equity instruments. The Board tentatively decided, as an adjustment principle, that an entity would be required to classify derivatives on own equity as equity instruments if preservation adjustments require the entity to preserve the relative economic interests of future shareholders to an equal or a lesser extent than those of the existing shareholders. The Board also tentatively decided that an entity would be required to classify derivatives on own equity as equity instruments if passage of time adjustments: (a) are pre-determined and vary only with the passage of time; and (b) fix the number of functional currency units per underlying equity instrument in terms of a present value. At a future Board meeting, the Board will begin its discussions on other topics included in the project plan discussed at the October 2019 Board meeting.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Dec 11, 2019

• At its meeting on December 11-12, 2019, the IASB met to discuss potential clarifications to IAS 32 that would help address challenges in practice in classifying financial instruments that will or may be settled in the issuer’s own equity instruments. In particular, the Board explored potential clarifications to the underlying principle for classifying derivatives on own equity. The Board was not asked to make any decisions. The Board will further discuss this topic including applying the potential clarifications to common challenges in practice.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Oct 23, 2019

• At its meeting on October 23, 2019, the IASB met to discuss the project plan for this project. In particular, the Board discussed the practice issues that it could address in the scope of the project and an indicative project timeline outlining the expected commencement of Board deliberations on each issue. The Board was not asked to make any decisions. At future Board meetings, the Board will discuss practice issues in the scope of the project and the viability of potential solutions, beginning with the classification of financial instruments that will or may be settled in the issuer’s own equity instruments.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Sep 25, 2019

• At its meeting on September 25, 2019, the IASB met to discuss the direction of this project. The Board tentatively decided on an approach that addresses practice issues by clarifying some principles in IAS 32 (Alternative C in Agenda Paper 5). The Board also tentatively agreed with the objectives and criteria set out in Agenda Paper 5 to determine the scope of the project (subject to some suggestions) and directed the staff to prepare a detailed project proposal. At a future Board meeting, the Board will discuss the detailed project proposal.

• Financial Instruments with Characteristics of Equity – International Accounting Standards Board

• Jul 22, 2019

• At its meeting on July 22-25, 2019, the Board met to hear a summary of feedback on the Board’s proposals set out in the Discussion Paper. The summary related to the following sections of the Discussion Paper: Section 1—Objective, scope and challenges; Section 6—Presentation; Section 7—Disclosures; and Section 8—Contractual terms. The Board was not asked to make any decisions. The Board will discuss the project’s direction at a future meeting. At its joint meeting with FASB on July 23, 2019, the Board also received an update on the FASB project on Distinguishing Liabilities from Equity.

• Financial Instruments with Characteristics of Equity - IASB

• Jun 18, 2019

• At its meeting on June 18, 2019, the Board met to hear a summary of feedback on proposals for classification of financial instruments in the Discussion Paper, Financial Instruments with Characteristics of Equity, including: (a) Section 2—The Board’s preferred approach; (b) Section 3—Classification of non-derivative financial instruments; (c) Section 4—Classification of derivative financial instruments; and (d) Section 5—Compound instruments and redemption obligation arrangements. The Board was not asked to make any decisions. At future Board meetings, the Board will receive summary of feedback on the remaining sections of the Discussion Paper.

• Financial Instruments with Characteristics of Equity – AcSB

• Dec 12, 2018

• At its meeting on December 12, 2018, the AcSB discussed its draft response letter in respect of the IASB’s Discussion Paper “Financial Instruments with Characteristics of Equity.” The Board directed the staff to make amendments based on its comments and may reconsider the revised draft at its January 15 meeting. A potential delay in the Board’s response letter by the January 7 due date has already been communicated to the IASB.

• Financial Instruments with Characteristics of Equity – AcSB

• Nov 12, 2018

• At its meeting on November 12-13, 2018, the AcSB discussed key points to include in its response letter to the IASB’s Discussion Paper, “Financial Instruments with Characteristics of Equity.” The Board considered the feedback from its IFRS® Discussion Group, Academic Advisory Council, and User Advisory Council. The Board’s views will also be informed by feedback from roundtable discussions held in various cities across Canada with IASB member Tom Scott. The Board encourages stakeholders to share their views on the IASB’s Discussion Paper by submitting a response to the IASB by January 7, 2019.

• Financial Instruments with Characteristics of Equity - IASB

• Jan 24, 2018

• At its meeting on January 24, 2018, the IASB discussed an issue raised on the pre-ballot draft of the FICE Discussion Paper. The Board discussed whether such an instrument could be analysed as an equity host and an embedded derivative asset if the issuer held the option to settle the claim. In cases where the entity does not have the option to limit the amount of a claim to the entity’s available economic resources, the instrument would be analysed as a liability host and an embedded derivative. This position is consistent with the Board’s preliminary view on contingent events. The Board tentatively decided: (i) before proposing any particular accounting requirements, to raise the issue in the Discussion Paper and seek feedback on whether separating embedded derivatives may be a potential solution; and (ii) to raise a question in the Discussion Paper about whether and how the attribution requirements may help provide information about complex payoffs if the embedded derivative is not separated from the equity host contract.

• Financial Instruments with Characteristics of Equity - IASB

• Mar 23, 2017

• On March 23, 2017, the IASB discussed: (i) the application of the Gamma approach to derivatives on ‘own equity’; (ii) a summary of interactions with other IFRS Standards; and (iii) due process and permission to ballot. No decisions were made. Given its publication schedule, the Board expects to publish the Discussion Paper towards the end of 2017.

• Financial Instruments with Characteristics of Equity - IASB

• Feb 22, 2017

• At its meeting on February 22, 2017, the IASB discussed: (i) the scope of contractual rights and obligations an entity should consider when applying the Gamma approach to a financial instrument; and (ii) application guidance and illustrative examples that will help clarify how its decisions on the Gamma approach would apply to accounting within equity. At a future meeting, the Board will discuss application of the Gamma approach to the classification of derivatives on non-controlling interests with an exercise price denominated in a foreign currency; and a summary of interactions with other IFRS Standards, IFRIC Interpretations and the Conceptual Framework in Financial Reporting.

• Financial Instruments with Characteristics of Equity - IASB

• Dec 13, 2016

• At its meeting on December 13, 2016, the IASB discussed how the Gamma approach would apply to classifying derivatives whose classification under IAS 32, Financial Instruments: Presentation has been challenging in practice. The Board discussed whether a derivative with particular variables would be solely dependent on the residual amount. The Board was not asked for any decisions. At a future meeting the Board will discuss: (i) the substance of rights and obligations in contracts and the interaction with legal and regulatory requirements; and (ii) the recognition, derecognition and reclassification of equity instruments.

• Financial Instruments with Characteristics of Equity - IASB

• Oct 18, 2016

• At its meeting on October 18-19, 2016, the IASB discussed claims that grant the issuer the right to choose between alternative settlement outcomes. Discussion continued to focus on developing the Gamma approach to classification and presentation. At a future meeting the Board will discuss: (i) classification of instruments meeting the existing puttables exception; (ii) substance of rights and obligations in contracts and the interaction with legal and regulatory requirements; and (iii) recognition, derecognition and reclassification of equity instruments.

• Financial Instruments with Characteristics of Equity - IASB

• Sep 20, 2016

• At its meeting on September 20, 2016, the IASB discussed the presentation of derivatives on ‘own equity’ that are classified as liabilities, as well as disclosures of financial liabilities and equity. The Board focused on its developing Gamma approach to classification and presentation. At a future meeting the Board will discuss: (i) classification of instruments meeting the existing puttables exception; (ii) accounting for conditional alternative settlement outcomes; and (iii) recognition, derecognition and reclassification of equity instruments.

• Financial Instruments with Characteristics of Equity - IASB

• Jul 18, 2016

• At its meeting on July 18-19, 2016, the IASB continued its discussion of potential approaches to classifying derivatives on ‘own equity’, including tentatively deciding that entities should: (a) not classify all derivatives as assets or liabilities; and (b) classify derivatives on ‘own equity’ in their entirety rather than splitting them into components. The Board focused its discussion on the Gamma approach. The Board was also provided with a summary of discussions to date for information only. The Board has identified a number of issues for discussion at a future meeting.

• Financial Instruments with Characteristics of Equity - IASB

• Jun 20, 2016

• At its meeting on June 20-22, 2016, the IASB received an oral update on the status of this research project, including a summary of the discussions at the recent joint meeting of the Capital Markets Advisory Committee and the Global Preparers Forum on June 16, 2016. No decisions were made.

• Financial Instruments with Characteristics of Equity - IASB

• May 17, 2016

• At its meeting on May 17-19, 2016, the IASB continued its discussion of potential requirements for the attribution of profit or loss and other comprehensive income for derivatives if they are classified as equity (such as warrants). Four possible approaches were discussed. The Board also identified a number of issues to be discussed at a future meeting.

• Financial Instruments with Characteristics of Equity - IASB

• Apr 20, 2016

• At its meeting on April 20, 2016, the IASB continued its discussion of the potential separate presentation requirements for subclasses of liabilities and of equity. They focused their discussion on the Gamma approach. The Board indicated that it would improve comparability to apply the separate presentation requirements to stand-alone and embedded derivatives that depend on the residual amount. The Board also discussed the specific requirements for determining the amount to be attributed to classes of equity other than ordinary shares. For non-derivative equity claims other than ordinary shares (such as non-cumulative preference shares), the Board indicated that it would be useful to attribute amounts based on the existing requirements for such instruments in IAS 33, Earnings per Share. For derivative equity claims (such as warrants), the Board discussed three approaches to the attribution of profit or loss and other comprehensive income. The Board was not asked for decisions at this meeting.

• Financial Instruments with Characteristics of Equity - IASB

• Feb 16, 2016

• At its meeting on February 16-17, 2016, the IASB discussed the further development of the three approaches (Alpha, Beta and Gamma) it had identified as potential ways of improving IAS 32, Financial Instruments: Presentation. Those three approaches classify claims as liabilities or equity based on different features of claims that are relevant to different assessments of the entity’s financial position and financial performance. The Board’s discussions focused on developing Approach Gamma, because it distinguishes claims based on a combination of the features used to distinguish claims in the other approaches.

• Financial Instruments with Characteristics of Equity - IASB

• Oct 21, 2015

• At its meeting on October 21, 2015, the IASB discussed an analysis of: (i) the challenges associated with accounting for derivatives on "own equity"; and (ii) how IAS 32 Financial Instruments: Presentation deals with those challenges. The IASB acknowledged that any approach to classifying derivatives on ‘own equity’ will require a compromise between reflecting the underlying exchange of equity and non-equity instruments and the operational challenges of doing so. The IASB will continue its discussion at a future meeting.

• Financial Instruments with Characteristics of Equity - IASB

• Sep 24, 2015

• At its meeting on September 24, 2015, the IASB discussed an analysis of the existing definitions and other related requirements in IAS 32, Financial Instruments: Presentation. It also discussed possible approaches for improvements to the existing definitions and other related requirements in IAS 32 that the staff intend to develop further as the project progresses. No decisions were made. The IASB will continue its discussion at a future meeting.