The Malaysian Accounting Standards Board (MASB) has today issued narrow-scope amendments to MFRS 101 Presentation of Financial Statements to clarify how to classify debt and other liabilities as current or non-current.
The amendments are word-for-word Classification of Liabilities as Current or Non-current (Amendments to IAS 1) issued by the International Accounting Standards Board.
The “Notice of Issuance” can be downloaded here.
ABOUT THE PRONOUNCEMENT
Classification of Liabilities as Current or Non-current (Amendments to MFRS 101 Presentation of Financial Statements)
The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity.
The amendments clarify, not change, existing requirements, and so are not expected to affect companies’ financial statements significantly. However, they could result in companies reclassifying some liabilities from current to non-current, and vice versa; this could affect a company’s loan covenants.
Thus, to give companies time to prepare for the amendments, the amendments shall apply to financial statements of annual periods beginning on or after 1 January 2022. Earlier application is permitted.
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