The Liabilities and Equity project was a modified joint project on which the US Financial Accounting Standards Board (FASB) took the lead for the research stage.
In February 2006 the IASB and the FASB published the Memorandum of Understanding (MOU) A Roadmap for Convergence between IFRSs and US GAAP–2006 to 2008. One of the goals set out in the MOU was to publish a due process document relating to a proposed standard on the distinction between financial liabilities and equity instruments.
In November 2007, the FASB published a Preliminary Views document—Financial Instruments with Characteristics of Equity. Consistent with the commitment in the MOU, in February 2008 the IASB published an IASB discussion paper on liabilities and equity that contained an IASB Invitation to Comment and the FASB Preliminary Views document.
From 2008 to 2010, the IASB and FASB jointly deliberated and developed a classification approach to distinguish liability and asset instruments from equity instruments. In March 2010, the IASB and FASB directed the staff to begin drafting an exposure draft on the boards’ proposed approach. However, comments received from external reviewers on the staff draft of the exposure draft led the boards to reconsidering whether to move forward with the exposure draft.
In October 2010, the IASB and FASB acknowledged that they did not have the capacity at that time to devote the time necessary to deliberate the project issues. Consequently, the boards tentatively decided to not publish the exposure draft as originally planned.
In December 2012, the IASB started discussing the subject of distinguishing liabilities from equity as part of its Conceptual Framework project. In April 2014, the IASB added the Financial Instruments with Characteristics of Equity project to its agenda as a separate research project.
