Financial Instruments with Characteristics of Equity: Part 2

The Discussion Paper (DP) sets out the Board’s thinking for a new standard which would replace the existing standard, IAS 32, Financial Instruments: Presentation which presents the principles for determining whether an issuer’s own instruments should be classified as debt or equity. Last month’s article on the IASB’s DP covered the Board’s preferred approach for determining classification and showed how the principles would apply to certain instruments. The principles for derivative instruments, compound instruments, and the proposals for presentation and disclosure are described below. This article also covers the discussion on the DP at the Accounting Standards Advisory Forum (ASAF) meeting drawing on the slides[1] that IASB Board members and staff presented.