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