28 January 2008

EFRAG Discussion Paper on Equity and Liabilities

EFRAG published a Discussion Paper “Distinguishing between Liabilities and Equity” on behalf of the Pro-active Accounting Activities in Europe (PAAinE). The paper was developed by the German standard-setter and presents a fifth possible approach: the so-called loss absorption approach

In November 2007, FASB published a Preliminary Views document “Financial Instruments with Characteristics of Equity”. That paper discusses three possible approaches to distinguishing between liabilities and equity.  The IASB will issue that document as an IASB discussion paper in the first quarter of 2008.  The IASB paper will amongst other things compare and contrast the three ‘FASB approaches’ with a fourth approach: the existing IFRS approach, which is set out in IAS 32 Financial Instruments: Presentation.

Deadline for comments is 28 July 2008.

Press release

Discussion paper 

© Graham Bishop