IASB publishes Amendments to IAS 1 – Non-current Liabilities with Covenants

Today, the IASB has issued Amendments to IAS 1 Non-current Liabilities with Covenants.

The amendments deal with the classification of non-current liabilities that are subject to the entity complying with conditions (often referred to ‘covenants’). The amendments clarify that only covenants with which an entity is required to comply on or before the reporting date should affect the classification of a liability as current or non-current.

Furthermore, the amendments introduce additional disclosure requirements for non-current liabilities with covenants. This information is intended to enable investors to assess the risk that a liability classified as non-current could become repayable within twelve months after the reporting period, including:

• the carrying amount of the liability,
• information about the covenants (such as their nature and when the entity is required to comply with them), and
• facts and circumstances, if any, that indicate the entity may have difficulty complying with the covenants.

The amendments are effective for annual reporting periods beginning on or after 1 January 2024, with early adoption permitted.

The amendments supplement the amendments to IAS 1 on the classification of liabilities as current or non-current published by the IASB in January 2020 (we reported).

The amendments are available from the IASB only, and subject to charge (further information).