Document ID: chunk:federal_register_of_legislation:F2023L00007:body:0:p5
Version: federal_register_of_legislation:F2023L00007
Segment Type: other
Provision Reference: 
Character Range: 10960–13823

to comply with them) and the carrying amount of related liabilities.
(b) facts and circumstances, if any, that indicate the entity may have difficulty complying with the covenants – for example, the entity having acted during or after the reporting period to avoid or mitigate a potential breach. Such facts and circumstances could also include the fact that the entity would not have complied with the covenants if they were to be assessed for compliance based on the entity's circumstances at the end of the reporting period.
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Transition and effective date
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139U AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current, issued in March 2020 amended paragraphs 69, 73, 74 and 76 and added paragraphs 72A, 75A, 76A and 76B. An entity shall apply those amendments for annual reporting periods beginning on or after 1 January 2024 1 January 2023 retrospectively in accordance with AASB 108. Earlier application is permitted. If an entity applies those amendments for an earlier period after the issue of AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants (see paragraph 139W), it shall also apply AASB 2022-6 for that period. If an entity applies AASB 2020-1 those amendments for an earlier period, it shall disclose that fact.
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139W AASB 2022-6, issued in December 2022, amended paragraphs 60, 71, 72A, 74 and 139U and added paragraphs 72B and 76ZA. An entity shall apply:
(a) the amendment to paragraph 139U immediately on issue of AASB 2022-6.
(b) all other amendments for annual reporting periods beginning on or after 1 January 2024 retrospectively in accordance with AASB 108. Earlier application is permitted. If an entity applies these amendments for an earlier period, it shall also apply AASB 2020-1 for that period. If an entity applies AASB 2022-6 for an earlier period, it shall disclose that fact.

Amendments to AASB Practice Statement 2 Making Materiality Judgements
The following amendment is a consequence of the amendments to AASB 101.

Example P is amended.  New text is underlined.

Information about covenants
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Example P—assessing whether information about covenants is material

Background
An entity has rapidly grown over the past five years and recently suffered some liquidity problems. A long-term loan was granted to the entity in the current reporting period. The loan agreement includes a clause that requires the entity to maintain a ratio of debt to equity below a specified threshold, to be measured at each reporting date (the covenant). According to the loan agreement, the debt-to-equity ratio has to be calculated on the basis of debt and equity figures as presented in the entity's Australian-Accounting-Standards financial statements. If the entity breaches the covenant, the entire loan becomes