LIABILITIES CLASSIFICATION AMENDED

The new AASB 2020-1 aims to promote consistency in Australian financial reporting.

Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current aims to help companies determine whether debt and other liabilities with an uncertain settlement date should be classified as current (due, or potentially due to be settled within a year) or non-current.

The amendments include clarifying the classification requirements for debt an entity settles by converting it into equity.

The amendments aim only to clarify, and therefore do not change any existing requirements. They are not expected to affect an entity's financial statements significantly.

Entities might, however, reclassify some liabilities from current to non-current, and vice versa, affecting loan covenants.

The standard applies to annual reporting periods beginning on or after 1 January 2022, early application permitted. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .