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CMA Intermediate · Corporate Accounting and Auditing · Presentation of Financial Statements (Ind AS 1)

Sundaram Ltd has a loan that meets the Ind AS 1 criteria for non-current classification at the reporting date, because it has the right to defer settlement for at least twelve months. Management intends to repay it within three months and actually repays it after year-end but before the financial statements are approved for issue. How should the loan be classified at the reporting date?

The loan stays non-current. Ind AS 1 says classification is unaffected by management's intention or by settlement after the reporting period but before approval of the statements, provided the non-current criteria are met. The entity may need to disclose the timing of settlement.

  1. ACurrent, because management intends to repay it within twelve months
  2. BCurrent, because it was repaid before the approval of the financial statements
  3. CNon-current, because it meets the non-current criteria; timing of settlement may need to be disclosedCorrect
  4. DSplit equally between current and non-current

Explanation

Under paragraph 75A, classification is unaffected by the likelihood of exercising the right to defer. If the liability meets the criteria for non-current, it stays non-current even if management intends to settle within twelve months or settles it between the reporting date and approval date. Disclosure of settlement timing may be needed.

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