• 2023 Issued Standards – IFRIC 19
  The IFRIC Interpretations are available in the 2023 Issued Standards, which include all amendments issued up to and including 1 January 2023.

Registration is required to access the free version of the Issued Standards. This version does not include additional documents that accompany the full standards (such as illustrative examples, implementation guidance and basis for conclusions).

IFRIC 19 provides accounting guidance where a financial liability is extinguished by the issue of equity instruments, often referred to as a debt for equity swap. The Interpretation provides guidance for the accounting treatment to be applied by the issuer of the equities (the debtor).

In this situation the equity instrument issued is measured at fair value; where fair value can’t be measured reliably, measurement should reflect the fair value of the liability extinguished. Any difference between the financial liability extinguished and the measurement of the equity instruments is recognised in profit or loss.

Where the issue of an equity instrument only part extinguishes the financial liability, the debtor must consider whether any consideration relates to the modification of the remaining liability. If it does, the fair value of the equity instrument issued must be allocated between the extinguished liability and the remaining liability.

If the remaining liability is substantially modified, then it must be derecognised and a new liability recognised.