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IASB publishes amendments to IAS 7

  • IASB document Image

Jan 29, 2016

The IASB has published amendments to IAS 7, “Statement of Cash Flows,” as part of its disclosure initiative (i.e., projects to improve the effectiveness of financial reporting disclosures). The objective of the amendments is to clarify IAS 7 to improve information provided to financial statement users about an entity’s financing activities.

The amendments require that an entity disclose, as necessary, the following changes in
li­a­bil­i­ties arising from financing ac­tiv­i­ties:

(a)   changes from financing cash flows;
(b)   changes arising from obtaining or losing control of sub­sidiaries or other busi­nesses;
(c)   the effect of changes in foreign exchange rates;
(d)   changes in fair values; and
(e)   other changes.

The IASB defines li­a­bil­i­ties arising from financing ac­tiv­i­ties as li­a­bil­i­ties “for which cash flows were, or future cash flows will be, clas­si­fied in the statement of cash flows as cash flows from financing ac­tiv­i­ties.” The amendments indicate that the new dis­clo­sure re­quire­ments also apply to changes in financial assets that meet this de­f­i­n­i­tion. The amend­ments state that one way to meet 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.”

The amend­ments are effective for annual periods beginning on or after January 1, 2017. Earlier ap­pli­ca­tion is permitted. Because 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.

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