The IASB amends requirements for classification of non-current liabilities with covenants

In October 2022, the IASB issued amendments to IAS 1 Presentation of Financial Statements.

The amendments clarify that only covenants with which an entity must comply on or before the reporting date will affect a liability’s classification as current or non-current. The combined impact of the 2020 amendments and the 2022 amendments will impact practice. Entities will, therefore, need to carefully consider the impact of the amendments on existing and planned loan agreements.

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