Dr. Hanne Böckem
Partner, Audit, DPP
KPMG AG Wirtschaftsprüfungsgesellschaft
The amendment concerns the classification of liabilities that are subject to covenants. The IASB clarifies that covenants that must be met before or on the balance sheet date can have an effect on the classification as current or non-current. In contrast, covenants that are only to be met after the balance sheet date have no influence on the classification. Instead of being taken into account in the classification, such ancillary conditions are to be disclosed in the notes. This is intended to enable users of financial statements to assess the extent to which non-current liabilities could become repayable within 12 months.
The amendments are effective for annual periods beginning on or after 1 January 2024. According to the IASB, early application of the amendments is permitted, but requires EU endorsement.
This amendment thus amends the two - not yet mandatory - amendments to IAS 1 on the same topic from January 2020 and July 2020.
The press release is available on the IASB website at this link.