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Financial Instruments – Some challenges arising from IAS 32

Financial Instruments – Challenges arising from IAS 32

This IFRS newsletter reports on the IASB’s September 2015 discussions on financial instruments.


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We report on the IASB’s latest discussions on its project on financial instruments with characteristics of equity.

Some challenges have been identified in applying IAS 32 to the classification of financial instruments with characteristics of equity.

The IASB has continued its discussions on the financial instruments with characteristics of equity project having previously identified features of claims that are relevant in distinguishing between liabilities and equity, and in making other related assessments of financial information.


“Although IAS 32 works well for many instruments, the staff’s analysis has highlighted inconsistencies that arise when using it to distinguish liabilities from equity.”


For more detail on these discussions, read Issue 26 of our IFRS Newsletter: Financial Instruments.

Financial instruments with characteristics of equity

At its September meeting, the Board focused on the classification of non-derivatives. It:

  • discussed the extent to which the requirements in IAS 32 Financial Instruments: Presentation capture the features that users need to make their assessments; and
  • considered three possible classification approaches.

The Board also decided to consult on a package of temporary measures to address concerns about implementing IFRS 9 Financial Instruments before the forthcoming insurance contracts standard comes into effect. This is discussed in Issue 48 of our IFRS Newsletter: Insurance.

The macro hedge accounting project was not discussed during the September meeting.  

Next steps for the project

To move the project forward, possible classification approaches need to be developed. In addition, the classification of derivatives will be considered at a future meeting.

Find out more

Go to our IFRS – Financial instruments hot topics page for more on these and other aspects of financial instruments accounting under IFRS.

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