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Description

Equity or Liability: Classifying and Presenting Liabilities on the Balance Sheet

Draw the line between equity and debt for instruments whose nature is not self-evident

  • 0.29 days — 2 h
  • In-person or virtual
  • Intermediate
  • Up to 6 participants

Locked-in shareholder current accounts | conditional advances | convertible bonds | participating securities: classifying these instruments on the liabilities side of the balance sheet is rarely obvious from the contract alone. A questionable classification distorts the level of equity | the gearing ratio | and sometimes compliance with covenants agreed with lenders.

These two hours revisit the logic of liability classification and the developments affecting it. The distinguishing criteria are applied to the most common instruments | then translated into journal entries and balance sheet presentation. The implications for the notes to the financial statements and for how the accounts are read are addressed at the end of the session.

Learning objectives

  • Distinguish equity from liabilities in the light of classification criteria
  • Classify the hybrid instruments encountered in privately held companies
  • Account for quasi-equity instruments and the return paid on them
  • Present the liabilities concerned on the balance sheet and in the notes
  • Measure the effect of a reclassification on financial ratios

What makes this programme different

Instruments are classified one by one from real contractual clauses
Each classification is carried through to the journal entry and the balance sheet presentation
The effect of classification on banking covenants is measured on a fully quantified case

Programme

1The Boundary Between Equity and Liabilities

Setting the criteria

  • Accounting definition of equity
  • Characteristics of a liability and the obligation to repay
  • Position of quasi-equity instruments on the balance sheet
  • Recent developments in liability classification

2Classifying Common Instruments

Case by case

  • Shareholder current accounts and lock-in agreements
  • Conditional advances and repayable grants
  • Convertible bonds and participating securities
  • Premiums and issue costs

3Presentation and Reading of the Accounts

What third parties see

  • Structuring the liabilities side of the balance sheet
  • Return paid on instruments and related finance costs
  • Disclosures to be included in the notes
  • Effect of classification on gearing and banking covenants

Who is it for

Accountants and chief accountants · as well as consolidation managers · external auditors and professional services firm staff.

Prerequisites

Sound understanding of how a balance sheet is built and of routine accounting entries.

Dates & locations

12 scheduled dates between November 2026 and December 2027. Seats are confirmed in the order enquiries are received.

November 2026

December 2026

January 2027

February 2027

March 2027

April 2027

May 2027

June 2027

September 2027

October 2027

November 2027

December 2027

None of these dates suit you? We open additional sessions on request, and any programme can be run privately for your team.

Practical details

Before the programme
Online positioning questionnaire. Your development objectives are shared with the trainer, who tailors the practical case studies to your context.
Teaching methods
Theoretical input, workshops and practical case studies. Digital course materials and method sheets provided.
Assessment
Multiple-choice tests and role-play exercises. Assessment of learning at the start and end of the programme, with immediate and 60-day follow-up evaluations.
After the programme
One year of access to the e-learning platform. Self-assessment of the skills acquired and a 30-day follow-up session with your trainer.
How to register
Registration online or on the basis of a quotation.
Lead time
11 working days after confirmation of registration.
Accessibility
Accessible to people of determination. Contact our accessibility coordinator to design a suitable solution: contact@mpf-academy.ae
Start dates
Rolling intake: in addition to the scheduled sessions, this programme can start on request.