CFOs: IASB Should Provide Better Definitions for Debt Instruments —CFO.com

U.S.-Based Multinationals Reporting Under IFRS Struggle With Classification of Equities, Liabilities

The International Accounting Standards Board agreed with respondents from its public consultation (a study that reached out to industry professionals at all levels in more than 80 countries in 2011) that it needs to better clarify definitions of assets and liabilities for debt instruments, CFO.com reports.

That, in turn, should help eliminate some uncertainty when accounting for assets and financial liabilities or nonfinancial liabilities (which can include land and equipment leases). More:

 

Distinguishing between debt and equity on a corporation’s balance sheet has been no easy task for CFOs and their staffs over the years. Financial instruments today can have features of both: a situation that can lead to misreporting and dire repercussions for senior management. But clearer definitions could make for easier accounting for U.S.-based multinationals that report under international financial reporting standards (IFRS).

The International Accounting Standards Board agreed last week with respondents from its public consultation (a study that reached out to industry professionals at all levels in more than 80 countries in 2011) that it needs to better clarify definitions of assets and liabilities for debt instruments. That, in turn, should help eliminate some uncertainty when accounting for assets and financial liabilities or nonfinancial liabilities (which can include land and equipment leases).

The respondents said “defining the nature of liabilities would advance IASB’s thinking on distinguishing between financial instruments that should be classified as equity and those instruments that should be classified as liabilities.”

Read the whole piece here. 

 

CFOs at U.S. Based Multi-Nationals Would Like the IASB to Clarify Definitions

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