A Draft Interpretation of IAS 32 Financial Instruments: Disclosure and Presentation.

SIC D4 Issued 1 December 1997.

Draft Interpretations are proposals that are not yet final.

Final Status: In March 1999, the IASC Board issued IAS 39 Financial Instruments: Recognition and Measurement. As a result, the SIC did not proceed with SIC D4.

Summary of SIC D4

The draft Interpretation addresses financial instruments that may be settled at the issuer's option either in cash or by the issue of its own equity instruments. The question is whether the issuer should classify such instruments as equity or liabilities. The SIC agreed that such instruments generally should be classified in accordance with IAS 32.05 and .18 as equity except that the present value of required cash outflows (e.g., periodic interest payments) should be classified as a separate liability component in accordance with IAS 32.23.