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IAS 32 Amendments - Financial Instruments: Presentation and IAS 1 Amendments - Presentation of Financial Statements: Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation


IAS 32 Financial Instruments: Presentation states that a financial instrument which gives the holder the right to put it back to the issuer for cash or another financial asset ('a puttable instrument') is a financial liability.

This includes shares puttable at fair value. Furthermore, changes in the fair value of these instruments are recognised in profit and loss. Similar issues also apply to some partnerships that are required to liquidate upon the exit of a partner (eg on retirement or death) and ordinary shares in a limited life entity.

The amendments proposed by the IASB are meant to ensure that instruments puttable at fair value and obligations arising on liquidation are classified as equity if certain criteria are met.

On 23 October 2006 EFRAG published its comment letter and on 16 May 2008 EFRAG published its Endorsement Advice to the European Commission (documents can be found bellow).    

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