IFRS – IASB amends the classification of liabilities

International Accounting Standards Board (IASB) amends the classification of liabilities as current or non-current.

Early in 2020, the International Accounting Standards Board (IASB) published Classification of Liabilities as Current or Non-Current (Amendments to IAS 1), which clarifies the guidance in IAS 1 Presentation of Financial statements on whether a liability should be classified as either current or non-current. In July 2020, the IASB deferred the application date to January 1, 2023.

Before the amendment, IAS 1 indicated that if an entity had an unconditional right to defer settlement of a liability for at least 12 months after the reporting period, then the liability is classified as non-current, if not, it is classified as current. Some preparers have found this indication confusing and consequently similar liabilities have been classified differently, making comparisons by investors difficult.