Current and non-current, or order of liquidity

Learning objectives

• Explain the general current / non-current classification requirement and its liquidity-based exception.L1
• Determine the appropriate presentation for a given case.L1, L2

Normative references

• IAS 1 §60An entity presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position (in accordance with paras. 66 to 76), except when a presentation based on liquidity provides information that is reliable and more relevant, in which case all assets and liabilities are presented in order of liquidity; the prohibition on classifying deferred taxes as current is set out in para. 56.
• IAS 1 §56When an entity presents current and non-current classifications in its statement of financial position, it does not classify deferred tax assets and liabilities as current.

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

4 questions

• A deferred tax liability expected to reverse within 12 months after the closing date is classified as a current liability.L1
• Prisme SA, a financial services company, considers that presenting its assets and liabilities in order of liquidity gives reliable and more relevant information than a current / non-current classification (documented judgement, case fact). May it adopt that presentation?L2
• Which statements about the current / non-current distinction are correct? More than one answer is possible.L1
• Delta SA presents a statement of financial position with current and non-current classifications (case fact). Its deferred tax asset, which management expects to recover within the next six months, may be classified as a current asset.L1