If an entity’s right to defer settlement of a liability is subject to complying with the required covenants only at a date subsequent to the reporting period, the entity has a right to defer settlement even if it does not comply with those covenants at the end of the reporting period. The requirement for the right to exist at the end of the reporting period applies to covenants which the entity is required to comply with on or before the reporting date regardless of whether the lender tests for compliance at that date or at a later date. The classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability for at least twelve months after the reporting period. An entity is required to provide disclosure when a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months after the reporting period. Entities will need to carefully consider the impact of these amendments on existing and planned loan arrangements. In this context, it is important to be aware that the amendments must be applied retrospectively. 

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Gain knowledge of the amendments and their implications for practice.

ADMIN MATTERS

CPD Hours:

3.5 hours