Private fund managers and others may have an easier time comparing the capital structures and financial statements of target companies following a proposal issued by the International Accounting Standards Board (IASB) last week.
The proposed amendments in the board’s exposure draft on Classification of Liabilities aim to provide clarity on when a liability or debt is classified as non-current and when it needs to be classified as current. That determination is made based on the entity’s rights at the end of the reporting period and make clear the link between the settlement of the liability and the outflow of resources from the entity.
“The clarification should help generate more consistent classification and reporting of some debt, and improve comparability between companies,” an IASB spokesperson told pfm.
The proposals are open for public comment until June 10, 2015.