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WorkpaperIAS 1 — Presentation of Financial StatementsL2 · L3

Current or non-current classification of a borrowing, covenants, reclassification and total of current liabilities

6 missions10 sections to document75 min

Prepared by: AI-assisted draft
Reviewed by: Not reviewed — human review required
Status: Published

Objective of the workpaper

Record the amount of the borrowing, the 12-month repayment schedule, the covenants (test date, required level, position at the closing date) and the waiver agreements with their date. The classification depends on the rights that exist at the closing date and not on the intentions of management: compute the non-current portion, judge the right to defer, prepare the reclassification entry and the total of current liabilities. The amounts, the due dates and the covenant thresholds are case data.

10 sections · 21 blocks · 2 calculations · 1 entry

IAS 1 §60
IAS 1 §66
IAS 1 §69
IAS 1 §72A
IAS 1 §72B
IAS 1 §76ZA

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

6 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity

Current or non-current classification of borrowings with covenants, reclassification and disclosures

Case tasks documented here

Borrowing A: compute the non-current portion.
Borrowing A: does the entity have the right to defer settlement at the closing date?
Borrowing B: compute the non-current portion before the effect of the covenant.
Borrowing B: does the entity have the right to defer at the closing date, in view of the February waiver?
Record the reclassification of borrowing B to current.
Borrowing C: does the intention to repay in September 20X7 change the classification?
Compute the total of current liabilities.

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
TERM_LOAN_WITH_ANNUAL_INSTALMENTS_THE_NEXT_DUE_30_JUNE_20X7
Covenants: nature, test date, required level, position at the closing date
Text
NET_DEBT_TO_EBITDA_TESTED_FROM_31_MARCH_20X7_AND_BELOW_THE_LIMIT_AT_THE_CLOSING_DATE
Waiver or renegotiation agreements: date and content
Text
Total amount of the borrowing at the closing date
Number
3,600,000
Portion due within 12 months under the schedule
Number
450,000
Amount reclassified from non-current to current
Number
Trade and other current payables
Number
Accrued expenses
Number
Portions due within 12 months of all the borrowings under the schedules
Number
Total current liabilities per the draft statement of financial position
Number

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
3,150,000
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
0
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Debit Non-current borrowings ← Amount reclassified from non-current to current ; Credit Current borrowings ← Amount reclassified from non-current to current

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Right existing at the closing date: portion beyond 12 months classified as non-current
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text
COVENANT_FIRST_TESTED_AFTER_THE_CLOSING_DATE_SO_IT_DOES_NOT_AFFECT_THE_RIGHT

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References

Checks and financial statement impact

Borrowing describedPass
Right to defer judged and supportedPass
Total amount = non-current portion + current portionPass
Reclassification entry balancedNot evaluated
Recomputed total current liabilities = total per the draft statement of financial positionNot evaluated

Assets: 0
Liabilities: 0
Profit or loss: 0
OCI: 0
Equity: 0

File and entity

Current or non-current classification of borrowings with covenants, reclassification and disclosures

Case tasks documented here

Borrowing A: compute the non-current portion.
Borrowing A: does the entity have the right to defer settlement at the closing date?
Borrowing B: compute the non-current portion before the effect of the covenant.
Borrowing B: does the entity have the right to defer at the closing date, in view of the February waiver?
Record the reclassification of borrowing B to current.
Borrowing C: does the intention to repay in September 20X7 change the classification?
Compute the total of current liabilities.

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
TERM_LOAN_WITH_ANNUAL_INSTALMENTS_LENDER_CAN_DEMAND_REPAYMENT_ON_BREACH
Covenants: nature, test date, required level, position at the closing date
Text
INTEREST_COVER_TESTED_AT_THE_CLOSING_DATE_AND_BELOW_THE_REQUIRED_LEVEL
Waiver or renegotiation agreements: date and content
Text
WAIVER_LETTER_OF_18_FEBRUARY_20X7_OBTAINED_AFTER_THE_CLOSING_DATE
Total amount of the borrowing at the closing date
Number
2,000,000
Portion due within 12 months under the schedule
Number
400,000
Amount reclassified from non-current to current
Number
1,600,000
Trade and other current payables
Number
Accrued expenses
Number
Portions due within 12 months of all the borrowings under the schedules
Number
Total current liabilities per the draft statement of financial position
Number

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
1,600,000
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
1,600,000
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Account Debit Credit
Non-current borrowings 1,600,000
Current borrowings 1,600,000

Account	Debit	Credit
Non-current borrowings	1,600,000
Current borrowings		1,600,000

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Right not existing at the closing date: borrowing classified as current
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text
COVENANT_TESTED_AT_THE_CLOSING_DATE_AND_NOT_MET_SO_NO_RIGHT_EXISTS_AT_THAT_DATE

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References

Checks and financial statement impact

Borrowing describedPass
Right to defer judged and supportedPass
Total amount = non-current portion + current portionPass
Reclassification entry balancedPass
Recomputed total current liabilities = total per the draft statement of financial positionNot evaluated

Assets: 0
Liabilities: 0
Profit or loss: 0
OCI: 0
Equity: 0

File and entity

Current or non-current classification of borrowings with covenants, reclassification and disclosures

Case tasks documented here

Borrowing A: compute the non-current portion.
Borrowing A: does the entity have the right to defer settlement at the closing date?
Borrowing B: compute the non-current portion before the effect of the covenant.
Borrowing B: does the entity have the right to defer at the closing date, in view of the February waiver?
Record the reclassification of borrowing B to current.
Borrowing C: does the intention to repay in September 20X7 change the classification?
Compute the total of current liabilities.

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
REVOLVING_FACILITY_MATURING_31_MARCH_20X9_WITH_NO_COVENANT
Covenants: nature, test date, required level, position at the closing date
Text
Waiver or renegotiation agreements: date and content
Text
Total amount of the borrowing at the closing date
Number
Portion due within 12 months under the schedule
Number
Amount reclassified from non-current to current
Number
Trade and other current payables
Number
Accrued expenses
Number
Portions due within 12 months of all the borrowings under the schedules
Number
Total current liabilities per the draft statement of financial position
Number

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
0
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
0
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Debit Non-current borrowings ← Amount reclassified from non-current to current ; Credit Current borrowings ← Amount reclassified from non-current to current

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Right existing at the closing date: portion beyond 12 months classified as non-current
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text
THE_INTENTION_TO_REPAY_IN_SEPTEMBER_20X7_DOES_NOT_AFFECT_THE_RIGHT_EXISTING_AT_THE_CLOSING_DATE

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References

Checks and financial statement impact

Borrowing describedPass
Right to defer judged and supportedPass
Total amount = non-current portion + current portionNot evaluated
Reclassification entry balancedNot evaluated
Recomputed total current liabilities = total per the draft statement of financial positionNot evaluated

Assets: 0
Liabilities: 0
Profit or loss: 0
OCI: 0
Equity: 0

File and entity

Current or non-current classification of borrowings with covenants, reclassification and disclosures

Case tasks documented here

Borrowing A: compute the non-current portion.
Borrowing A: does the entity have the right to defer settlement at the closing date?
Borrowing B: compute the non-current portion before the effect of the covenant.
Borrowing B: does the entity have the right to defer at the closing date, in view of the February waiver?
Record the reclassification of borrowing B to current.
Borrowing C: does the intention to repay in September 20X7 change the classification?
Compute the total of current liabilities.

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
ALL_THE_CURRENT_LIABILITIES_OF_TAVELLE
Covenants: nature, test date, required level, position at the closing date
Text
Waiver or renegotiation agreements: date and content
Text
Total amount of the borrowing at the closing date
Number
Portion due within 12 months under the schedule
Number
Amount reclassified from non-current to current
Number
1,600,000
Trade and other current payables
Number
1,250,000
Accrued expenses
Number
310,000
Portions due within 12 months of all the borrowings under the schedules
Number
850,000
Total current liabilities per the draft statement of financial position
Number
4,010,000

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
0
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
4,010,000
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Account Debit Credit
Non-current borrowings 1,600,000
Current borrowings 1,600,000

Account	Debit	Credit
Non-current borrowings	1,600,000
Current borrowings		1,600,000

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Not applicable
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References

Checks and financial statement impact

Borrowing describedPass
Right to defer judged and supportedPass
Total amount = non-current portion + current portionNot evaluated
Reclassification entry balancedPass
Recomputed total current liabilities = total per the draft statement of financial positionPass

Assets: 0
Liabilities: 0
Profit or loss: 0
OCI: 0
Equity: 0

File and entity

File on the presentation of financial statements under IAS 1: fair presentation, classification of liabilities, comprehensive income, notes and transition view to IFRS 18

Case tasks documented here

Altis borrowing: compute the non-current portion before the effect of the covenant.
Does the entity have the right to defer settlement at the closing date, in view of the letter of 20 February 20X7?
Record the reclassification of the borrowing to current.
Compute the total of current liabilities.

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
TERM_LOAN_WITH_ANNUAL_INSTALMENTS_LENDER_CAN_DEMAND_REPAYMENT_ON_BREACH
Covenants: nature, test date, required level, position at the closing date
Text
LEVERAGE_COVENANT_TESTED_AT_THE_CLOSING_DATE_ABOVE_THE_LIMIT
Waiver or renegotiation agreements: date and content
Text
LETTER_OF_20_FEBRUARY_20X7_AFTER_THE_CLOSING_DATE
Total amount of the borrowing at the closing date
Number
4,500,000
Portion due within 12 months under the schedule
Number
500,000
Amount reclassified from non-current to current
Number
4,000,000
Trade and other current payables
Number
Accrued expenses
Number
Portions due within 12 months of all the borrowings under the schedules
Number
Total current liabilities per the draft statement of financial position
Number

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
4,000,000
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
4,000,000
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Account Debit Credit
Non-current borrowings 4,000,000
Current borrowings 4,000,000

Account	Debit	Credit
Non-current borrowings	4,000,000
Current borrowings		4,000,000

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Right not existing at the closing date: borrowing classified as current
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text
COVENANT_TESTED_AT_THE_CLOSING_DATE_AND_NOT_MET_AND_THE_LETTER_POST_DATES_THE_CLOSING_DATE

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References

Checks and financial statement impact

Borrowing describedPass
Right to defer judged and supportedPass
Total amount = non-current portion + current portionPass
Reclassification entry balancedPass
Recomputed total current liabilities = total per the draft statement of financial positionNot evaluated

Assets: 0
Liabilities: 0
Profit or loss: 0
OCI: 0
Equity: 0

File and entity

File on the presentation of financial statements under IAS 1: fair presentation, classification of liabilities, comprehensive income, notes and transition view to IFRS 18

Case tasks documented here

Altis borrowing: compute the non-current portion before the effect of the covenant.
Does the entity have the right to defer settlement at the closing date, in view of the letter of 20 February 20X7?
Record the reclassification of the borrowing to current.
Compute the total of current liabilities.

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
ALL_THE_CURRENT_LIABILITIES_OF_MERVANE
Covenants: nature, test date, required level, position at the closing date
Text
Waiver or renegotiation agreements: date and content
Text
Total amount of the borrowing at the closing date
Number
Portion due within 12 months under the schedule
Number
Amount reclassified from non-current to current
Number
4,000,000
Trade and other current payables
Number
2,150,000
Accrued expenses
Number
420,000
Portions due within 12 months of all the borrowings under the schedules
Number
500,000
Total current liabilities per the draft statement of financial position
Number

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
0
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
7,070,000
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Account Debit Credit
Non-current borrowings 4,000,000
Current borrowings 4,000,000

Account	Debit	Credit
Non-current borrowings	4,000,000
Current borrowings		4,000,000

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Not applicable
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References

Checks and financial statement impact

Borrowing describedPass
Right to defer judged and supportedPass
Total amount = non-current portion + current portionNot evaluated
Reclassification entry balancedPass
Recomputed total current liabilities = total per the draft statement of financial positionNot evaluated

Assets: 0
Liabilities: 0
Profit or loss: 0
OCI: 0
Equity: 0

Facts and data

Inputs

Borrowing: lender, amount, due dates, security, intention of management
TextRequired
Covenants: nature, test date, required level, position at the closing date
Text
Waiver or renegotiation agreements: date and content
Text
Total amount of the borrowing at the closing date
Number
Portion due within 12 months under the schedule
Number
Amount reclassified from non-current to current
Number
Trade and other current payables
Number
Accrued expenses
Number
Portions due within 12 months of all the borrowings under the schedules
Number
Total current liabilities per the draft statement of financial position
Number

Supporting documents

Evidence

Documents obtained and referenced (loan agreement, repayment schedule, covenant compliance certificate, waiver letter)
EvidenceRequired

Analysis of the classification of liabilities

Analysis

IAS 1 §60IAS 1 §66IAS 1 §69IAS 1 §72AIAS 1 §72BIAS 1 §76ZA

Points examined: current or non-current classification
ChecklistRequired
- Assets and liabilities presented as current and non-current, unless a liquidity presentation is more relevant
- Criteria of a current asset examined: normal cycle, trading, 12 months, cash
- Criteria of a current liability examined, including the right to defer settlement for at least 12 months
- Right to defer with substance and existing at the closing date
- Covenants to be complied with at the closing date or before: effect on the right; covenants to be complied with afterwards: no effect on the classification
- Intentions and expectations of management not used as a classification criterion

Calculations

IAS 1 §69

Non-current portion (total amount − portion due within 12 months)
Calculation
Total amount of the borrowing at the closing date ; − Portion due within 12 months under the schedule
Total current liabilities
Calculation
Trade and other current payables ; Accrued expenses ; Portions due within 12 months of all the borrowings under the schedules ; Amount reclassified from non-current to current

Illustrative entries

Entries

Reclassification entry to current
Entry
Debit Non-current borrowings ← Amount reclassified from non-current to current ; Credit Current borrowings ← Amount reclassified from non-current to current

Judgment: right to defer settlement

Judgment

IAS 1 §72AIAS 1 §72B

Right to defer settlement at the closing date
JudgmentRequired
Right existing at the closing date: portion beyond 12 months classified as non-current / Right not existing at the closing date: borrowing classified as current / Not applicable
Professional judgment: the right is assessed at the closing date; a waiver obtained after that date does not create a right existing at the closing date.
Rationale: covenants to be complied with at the closing date or before, position at the closing date, date of the waiver
Text

Items to document for the covenant information

Disclosure

IAS 1 §76ZA

Information to prepare on a non-current liability subject to covenants
Checklist
- Information enabling users to assess the risk that the liability becomes repayable within 12 months
- Carrying amount of the liability and nature of the covenants concerned

Effect on the financial statements

FS impact

Effect derived from the entries
Table

Conclusion

Classification retained for each borrowing, right to defer at the closing date, non-current portion, reclassification where applicable, total of current liabilities and covenant information
ConclusionRequired

Normative references

References

Normative references cited in this workpaper
References