28. June 2018

IASB publishes Discussion paper Financial Instruments with Characteristics of Equity

Today, the IASB has published the Discussion Paper DP/2018/1 Financial Instruments with Characteristics of Equity (FICE).

The IASB’s work on its Research Project on FICE was triggered inter alia by the concerns raised by constituents and submissions to the IFRS IC, both regarding IAS 32 Financial Instruments: Presentation. These concerns address conceptual and application challenges, such as put options over non-controlling interests and puttable instruments that do not meet the exception in paras. 16A and 16B of IAS 32.

On the basis of the dichotomy for the claims side of the balance sheet, the board developed a principle for the classification of claims that results in the same classification outcomes as IAS 32, subject to some exceptions. Furthermore, the IASB introduces ideas to minimise information deficits stemming from the dichotomy, by presentation and disclosures.

Comments may be submitted to the IASB until 7 January 2019.