The International Accounting Standards Board (IASB) has issued Exposure Draft on Classification of Rights Issues (proposed amendment to IAS 32) with the objective to clarify the accounting treatment when rights issues are denominated in a currency other than the functional currency of the issuer. Current practice appears to require such issues to be accounted for as derivative liabilities. The proposals state that if such rights are issued pro rata to an entity’s existing shareholders for a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated.
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Invitation to comments
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ASB invites comments on the said Draft from the public. The downloadable version of the draft is available at http://www.iasb.org/NR/rdonlyres/DDAEFAC3-3C20-4EBA-AD71-D21170ADF0EF/0/EDIAS32Classificationrights.pdf. Comments would be most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording.
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Comments should be submitted in writing to the Secretary, Accounting Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi-110002, so as to be received not later than September 04, 2009. Comments can also be sent by e-mail at asb@icai.org or edcommentsasb@icai.org.
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