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australian standards current liability

  1. 3,904 Posts.
    Following on from Russ's post on a different thread I thought I would dig out the Australian standard to see what the actual rule is.

    The relevant standard is AASB 101

    http://www.aasb.com.au/public_docs/aasb_standards_2005/pdf/AASB101_09-07.pdf


    The definition is a bit iffy, the meaty bit is as follows;


    If an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility, it classifies the obligation as non-current, even if it would otherwise be due within a shorter period. However, when
    refinancing or rolling over the obligation is not at the discretion of the entity (for example, there is no arrangement for refinancing), the entity does not consider the potential to refinance the obligation as current.

    The Full blurb is

    73. If an entity expects, and has the discretion, to refinance or roll over an
    obligation for at least twelve months after the reporting period under an existing loan facility, it classifies the obligation as non-current, even if it would otherwise be due within a shorter period. However, when refinancing or rolling over the obligation is not at the discretion of the entity (for example, there is no arrangement for refinancing), the entity does not consider the potential to refinance the obligation as current. Crypto comment: the last sentence is a doosey - what does that mean?

    74. When an entity breaches a provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand, it classifies the liability as current, even if the lender agreed, after the reporting period and before
    the authorisation of the financial statements for issue, not to demand payment as a consequence of the breach. An entity classifies the liability as current because, at the end of the reporting period, it does not have an unconditional right to defer its settlement for at least twelve months after that date.

    75. However, an entity classifies the liability as non-current if the lender agreed by the end of the reporting period to provide a period of grace ending at least twelve months after the reporting period, within which
    the entity can rectify the breach and during which the lender cannot demand immediate repayment.

    76. In respect of loans classified as current liabilities, if the following events occur between the end of the reporting period and the date the financial statements are authorised for issue, those events are disclosed
    as non-adjusting events in accordance with AASB 110 Events after the End of the Reporting Period:

    (a) refinancing on a long-term basis;
    (b) rectification of a breach of a long-term loan arrangement; and
    (c) the granting by the lender of a period of grace to rectify a breach of a long-term loan arrangement


 
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