Disclosure on non-current liabilities subject to covenants

Learning objectives

• Explain the objective of disclosures about liabilities subject to covenants.L2
• Identify the situations in which the disclosures are required.L2, L3

Normative references

• IAS 1 §76ZAWhen a liability arising from a loan arrangement is classified as non-current although the right to defer depends on covenants to be complied with within twelve months after the reporting period, the entity discloses in the notes information that enables users to understand the risk that the liability could become repayable within those twelve months, including information about the covenants (nature, compliance dates) and the carrying amount of the related liabilities, and facts and circumstances indicating that it may have difficulty complying with them.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• A liability subject to covenants to be complied with within 12 months is classified as non-current. What is the objective of the information the entity then provides in the notes?L2
• At 31 December 2026, Eolis SA has four loans. Which one requires the note disclosure on repayment risk provided for liabilities subject to covenants?L3