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ESMA comment letter on the IASB's exposure draft of amendments to IAS 1 regarding the classification of liabilities

  • ESMA (European Securities and Markets Authority) (dark gray) Image

05 Jun 2015

The European Securities and Markets Authority (ESMA) has published its comment letter on the IASB exposure draft (ED) proposing amendments that aim at a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.

On 10 February 2015, the IASB issued ED/2015/1 Classification of Liabilities (Proposed amendments to IAS 1). The main objectives of the proposal are to (1) clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period, (2) make the link clear between the settlement of a liability and the outflow of resources from an entity, and (3) reorganise the guidance in IAS 1 with respect to classification of liabilities as current or non-current..

ESMA supports the proposals in the ED but believes that “there is a need to further improve the requirements on classification of liabilities as either current or non-current when rights in place at the reporting date are subject to a condition”.  ESMA also encourages the IASB, as part of this amendment, to “explicitly address” the criteria for classification of liabilities with uncertain timing as current or non-current.

Further comments are included within the full comment letter which is available on the ESMA website.

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