A look at the Extinguishing Financial Liabilities with Equity Instruments.
Urgent Issues Task Force (UITF) Abstract 47 implements the requirements of IFRIC Interpretation 19 'Extinguishing Financial Liabilities with Equity Instruments'. The Abstract is applicable to entities preparing their financial statements in accordance with UK GAAP and applying FRS 26 (IAS 39) 'Financial Instruments: Recognition and Measurement'.
The Abstract addresses the recognition of an entity's own equity instruments where these are issued to extinguish all or part of a financial liability. The consensus reached is that the equity instruments issued should be measured at the fair value of the equity, unless that fair value cannot be reliably measured.
The effective date for application of the Abstract is for annual periods beginning on or after 1 July 2010, with earlier application permitted. If an entity applies the Abstract for a period beginning before 1 July 2010, it shall disclose that fact.
An entity shall apply a change in accounting policy in accordance with FRS 18 Accounting Policies from the beginning of the earliest comparative period presented.