Loan default and breach
A breach may concern payment, a financial covenant or another contractual condition. Its consequences depend on the agreement, applicable law and reporting-date facts, including any rights and waivers. The entity considers classification and applicable disclosure requirements; not every covenant breach automatically makes a liability current or changes its carrying amount.
Worked example
A borrower misses an interest payment at the reporting date. It examines the lender’s contractual rights and the timing of any waiver and applies the relevant presentation and disclosure requirements.
Common mistake
Assuming that a waiver received after the reporting date always changes the classification at that date, or that every breach has the same consequence.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Supporting | September 2026–June 2027 |
| ACCA | SBR | Supporting | September 2026–June 2027 |