Amended Financial Reporting Standards and Interpretations issued and applicable to December 2024 year end

As we approach the end of the 2024 accounting period, it's crucial to stay informed about the latest updates to the Hong Kong Financial Reporting Standards (HKFRS). Here are the key changes and amendments that will impact your financial reporting:

1.    HKAS 1: Classification of Liabilities as Current or Noncurrent (Amendments)
These amendments clarify the criteria for classifying liabilities as current or non-current. The key change is that a liability is classified as non-current if the entity has the right to defer settlement for at least 12 months after the reporting period. This right must exist at the end of the reporting period and must not be subject to conditions that the entity cannot control.

2.    HKAS 1: Non-current Liabilities with Covenants (Amendments)
These amendments address the classification of liabilities with covenants. They clarify that covenants that an entity must comply with after the reporting date do not affect the classification of a liability as current or non-current at the reporting date. However, covenants that must be complied with on or before the reporting date do affect the classification.

3.    HKFRS 16: Lease Liability in a Sale and Leaseback (Amendments)
These amendments provide guidance on how to account for a sale and leaseback transaction. Specifically, they clarify how to measure the lease liability and the right-of-use asset in such transactions. The amendments ensure that the seller-lessee does not recognize any gain or loss related to the right of use retained.

4.    HK Int 5 (Revised): Hong Kong Interpretation 5 (Revised)
Presentation of Financial Statements – Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause (Amendments)
This interpretation provides guidance on how to classify a term loan that includes a repayment on demand clause. It clarifies that such loans should be classified as current liabilities unless the borrower has the right to defer repayment for at least 12 months after the reporting period.

5.    HKAS 7 and HKFRS 7: Supplier Finance Arrangements (Amendments)
These amendments introduce new disclosure requirements for supplier finance arrangements. Entities must disclose the terms and conditions of these arrangements, the carrying amounts of financial liabilities that are part of these arrangements, and the effects on the entity’s liabilities and cash flows. This aims to enhance transparency and provide better information to users of financial statements.

Conclusion
These amendments are crucial for ensuring compliance with the latest financial reporting standards. We recommend all entities review these changes thoroughly and assess their impact on your financial statements for the year ending December 31, 2024.

Stay informed and ensure your financial reporting remains accurate and up-to-date.

For more information, please contact Ms. Amie Cheung at amie.cheung@lccpa.com.hk

About Lawrence Cheung CPA:

Lawrence Cheung C.P.A. Company Limited (LCCPA) is Alliott Global Alliance’s accounting, audit, and tax representative in Hong Kong. Founded in 1978, Lawrence Cheung C.P.A. Company Limited (LCCPA) is a professional accounting firm registered under the Professional Accountants Ordinance with the Hong Kong Institute of Certified Public Accountants. LCCPA is a leading firm of certified public accountants ("CPA") and business advisers providing an integrated range of services with a commitment to excel in all practice areas. Their portfolio of clients is diverse ranging from SMEs, regulated entities under Securities and Futures Ordinance to multi-national corporations. Their directors are ex-Big-four accountants with extensive experiences in audits of both Hong Kong and overseas private and listed companies, taxation, business advisory, computer consultancy, merger and acquisition, company secretary, risk management, initial public floatation, corporate and group restructuring exercises.