Document ID: chunk:federal_register_of_legislation:F2023L00951:body:0:p3
Version: federal_register_of_legislation:F2023L00951
Segment Type: other
Provision Reference: 
Character Range: 6097–9241

current when:
               (a) it expects to settle the liability in the entity's normal operating cycle;
               (b) it holds the liability primarily for the purpose of trading;
               (c) the liability is due to be settled within twelve months after the reporting date; or
               (d) the entity does not have the an unconditional right at the reporting date to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
               [Based on IFRS for SMEs Standard paragraph 4.7]
          41 An entity shall classify all other liabilities as non-current. [IFRS for SMEs Standard paragraph 4.8]
          41A 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 Financial Instruments: Presentation, the entity classifies the option as an equity instrument, recognising it separately from the liability as an equity component of a compound financial instrument.
          …

          Information to be presented either in the statement of financial position or in the notes

          …

          47A In applying paragraph 40, 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 twelve months after the reporting date. 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 twelve months after the reporting date, 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; and
               (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 reporting date.

Commencement of the legislative instrument
     6                        For legal purposes, this legislative instrument commences on 31 December 2023.

Basis for Conclusions

This Basis for Conclusions accompanies, but is not part of, AASB 2023-3 Amendments to Australian Accounting Standards – Disclosure of Non-current Liabilities with Covenants: Tier 2.

Introduction
     BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board's considerations in reaching the conclusions in this Standard. It