Exposure Draft IASB/ED/2023/5 Financial Instruments with Characteristics of Equity (Proposed amendments to IAS 32, IFRS 7 and IAS 1)

The International Accounting Standards Board (IASB) has published for public comment the Exposure Draft IASB/ED/2023/5 Financial Instruments with Characteristics of Equity (Proposed amendments to IAS 32, IFRS 7 and IAS 1). 

The proposed amendments aim:

• to improve the information an entity provides in its financial statements about its financial liabilities and equity instruments within the scope of IAS 32 Financial Instruments: Presentation; and

• to resolve application issues entities have when applying the classification requirements in IAS 32.

The IASB concluded, in general, that IAS 32 works well for most financial instruments. However, the growing number of complex financial instruments with both financial liability and equity characteristics have posed challenges for entities applying IAS 32 and has resulted in diversity in practice regarding classification. Therefore, the IASB proposes to clarify the classification requirements in IAS 32, including their underlying principles, to address known practice issues that arise in applying IAS 32. 

Also, in response to calls from users of financial statements, the IASB sets out proposals to improve the presentation and disclosure of information about financial liabilities and equity instruments, by:

• amending IFRS 7 Financial Instruments: Disclosures to require disclosures about financial liabilities and equity instruments within the scope of IAS 32; and

• amending IAS 1 Presentation of Financial Statements to require separate presentation of amounts attributable to ordinary shareholders.

Click here to download the Exposure Draft, Basis for Conclusions, Illustrative Examples and Implementation Guidance, and Snapshot.

Invitation to comment

The Exposure Draft is open for comment until 29 February 2024.

You may provide your comments via email to us at technical@masb.org.my.