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12 Mar. 2020

Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current (Amendments to AASB 101)

Attempting to promote consistency in financial reporting, AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current aims to help 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 only clarify, and therefore do not change any 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.

This Standard applies to annual reporting periods beginning on or after 1 January 2022, with early application permitted.