The Rise and Fall of Equity-Liabilities Distinction in IASB’s Agenda

The distinction between equity and liabilities is a challenging question for international standard setters. On this topic, the IASB and the FASB have developed a long-term project with the aim of addressing unresolved issues around classifying financial instruments as either equity or liabilities. With this regard, many approaches, which involve various effects on the gearing and on the reported earnings, have been proposed.The IASB decided not to develop his Discussion Paper into an Exposure Draft, however, and the project was abandoned in favour of addressing what were felt to be greater priorities at the time.