FASB proposes amendments to classification of debt that would bring US GAAP and IFRSs closer together
13 Sep 2019
The US standard-setter FASB has issued a revised version of its proposed Accounting Standards Update (ASU) 'Simplifying the Classification of Debt in a Classified Balance Sheet (Current Versus Noncurrent).'
The proposed amendments would make US GAAP more consistent with IFRSs, especially with IAS 1 Presentation of Financial Statements that includes guidance on the classification of liabilities. The exposure draft notes that FASB leveraged IAS 1 guidance when developing its proposals for the classification of debt. Furthermore, the FASB’s decision on applying the debt classification principle to post-balance-sheet refinancings of debt is consistent with the guidance in IAS 1. However, differences would still remain between US GAAP and IFRSs for classifying debt arrangements with covenant violations.
The IASB currently has a project on its agenda to amend IAS 1 that is specifically related to the classification of liabilities. Final amendments to IAS 1 are currently expected in the fourth quarter of 2019.
The exposure draft can be accessed through the press release on the FASB website. Comments are requested by 28 October 2019.
