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IFRS® Accounting Standards

Financial Instruments with Characteristics of Equity

Summary

The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to develop narrow scope amendments to IAS 32 Financial Instruments: Presentation (IAS 32).

The objective of this project is to address diversity in practice in applying IAS 32 for the classification of certain financial instruments with both financial liability and equity characteristics. That diversity reduces the comparability and understandability of financial statements, making it difficult for users of financial statements to assess the effects of financial instruments on the issuer’s financial position and performance.

The project seeks to address the diversity in practice by clarifying the underlying principles in IAS 32 and adding application guidance to facilitate the consistent application of those principles.

The AcSB’s due process includes ensuring that Canadian entities’ financial reporting needs are considered by the IASB and issuing the AcSB’s own exposure draft on each IASB proposal. Subject to the responses to the AcSB’s exposure draft on whether the IASB’s proposals are appropriate for application in Canada, the AcSB expects that the amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRS® Accounting Standards for publicly accountable enterprises.

Staff Contact(s)

Eric English, CPA, CA Principal, Accounting Standards

Prajesh Marwaha, CPA Principal, Accounting Standards

Project Status

  • Information gathering

    Research activities to inform the scope of the project, including issuance of the IASB’s Discussion paper, public outreach and deliberation of feedback completed prior to December 2020

  • Approving project

    The IASB moved its Financial Instruments with Characteristics of Equity project from its research programme to the standard-setting programme in December 2020

  • Engaging Communities

    The IASB issued its Exposure Draft, Financial Instruments with Characteristics of Equity, in November 2023

    The AcSB issued its Exposure Draft, which corresponds to the IASB Exposure Draft in February 2024

  • Deliberating feedback

    The AcSB submitted its response letter to the IASB in March 2024

    The IASB is currently deliberating comments on their Exposure Draft

  • Final pronouncement
Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.