Financial Instruments – Characteristics of equity

Financial Instruments – Characteristics of equity

This IFRS newsletter reports on the IASB's April discussions on financial instruments.


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Further progress has been made in exploring ways to present useful information not captured by a binary classification approach.

The discussions continue…

At its April meeting, the Board discussed:

  • whether the scope of any separate presentation requirements for liabilities that depend on a residual amount should include stand-alone derivatives and embedded derivatives; and
  • the attribution of profit or loss and other comprehensive income (OCI) to equity claims (both non-derivatives and derivatives) other than ordinary shares.

The Board was also provided with feedback from the 2015 Agenda Consultation. It was evident that current IAS 32 requirements continue to cause application challenges, especially for new instruments issued with complex terms. 


“A binary classification approach cannot by itself portray all useful information. New presentation and attribution requirements could help address this shortfall but more work is needed to refine how they might apply.”  


For more detail on these discussions, read Issue 29 of our IFRS Newsletter: Financial Instruments.

Next steps for the project

To move the project forward, the Board will consider refinements to the definition of the residual amount, including the fixed-for-fixed condition. It will also further consider the presentation of income and expense that depend on a residual amount in profit or loss or OCI, the attribution approaches for derivative equity claims and disclosure requirements for equity claims.

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

Find out more

Visit our IFRS Newsletters page for the latest discussions on these issues.

And 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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