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FASB will converge with IASB on debt classification

  • FASB (old) Image

12 Jun 2003

The US Financial Accounting Standards Board has tentatively decided, as part of its short-term convergence project, to propose adoption of the positions in the IASB's Improvements Exposure Draft that: Long-term debt due within 12 months of the balance sheet date should be classified as a current liability unless an agreement to refinance the liability on a long-term basis is completed on or before the balance sheet date. Long-term debt payable on demand at the balance sheet date because the entity breached a condition of its loan agreement should be classified as current unless the lender has agreed on or before the balance sheet date to provide a grace period for rectifying the breach during which the obligation is not callable and either (a) the entity rectifies the breach within the grace period or (b) at the time that the financial statements are issued, it is probable that the breach will be rectified within the grace period. .

The US Financial Accounting Standards Board has tentatively decided, as part of its short-term convergence project, to propose adoption of the positions in the IASB's Improvements Exposure Draft that:

  • Long-term debt due within 12 months of the balance sheet date should be classified as a current liability unless an agreement to refinance the liability on a long-term basis is completed on or before the balance sheet date.
  • Long-term debt payable on demand at the balance sheet date because the entity breached a condition of its loan agreement should be classified as current unless the lender has agreed on or before the balance sheet date to provide a grace period for rectifying the breach during which the obligation is not callable and either (a) the entity rectifies the breach within the grace period or (b) at the time that the financial statements are issued, it is probable that the breach will be rectified within the grace period.

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