Document ID: chunk:federal_register_of_legislation:F2024L00708:body:0:p58
Version: federal_register_of_legislation:F2024L00708
Segment Type: other
Provision Reference: 
Character Range: 154729–157599

financial statements to understand the impact of the liability on the entity's financial position (see paragraphs 6C(c) of AASB 108 and B105(d)).
B105 If the following events occur between the end of the reporting period and the date the financial statements are authorised for issue, those events are disclosed as non-adjusting events in accordance with AASB 110 Events after the Reporting Period:
(a) refinancing on a long-term basis of a liability classified as current (see paragraph B98);
(b) rectification of a breach of a long-term loan arrangement classified as current (see paragraph B102);
(c) the granting by the lender of a period of grace to rectify a breach of a long-term loan arrangement classified as current (see paragraph B103); and
(d) settlement of a liability classified as non-current (see paragraph B104).
B106 In applying paragraphs 101–102 and B96–B103 an entity might classify liabilities arising from loan arrangements as non-current when the entity's right to defer settlement of those liabilities is subject to the entity complying with covenants within 12 months after the reporting period (see paragraph B100(b)). In such situations, the entity shall disclose information in the notes that enables users of financial statements to understand the risk that the liabilities could become repayable within 12 months after the reporting period, including:
(a) information about the covenants (including the nature of the covenants and when the entity is required 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.

Settlement (paragraphs 101(a), 101(c) and 101(d))
B107 For the purpose of classifying a liability as current or non-current, settlement refers to a transfer to the counterparty that results in the extinguishment of the liability. The transfer could be of:
(a) cash or other economic resources – for example, goods or services; or
(b) the entity's own equity instruments, unless paragraph B108 applies.
B108 Terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the entity's own equity instruments do not affect its classification as current or non-current if, applying AASB 132, the entity classifies the option as an equity instrument, recognising it separately from the liability as an equity component of a compound financial instrument.

Items to be presented in the statement of financial