IFRS 18 Presentation and Disclosure in Financial Statements PDF

April 2024 IFRS 18 IFRS ® Accounting Standard Presentation and Disclosure in Financial Statements International Accounting Standards Board IFRS 18 Presentation and Disclosure in Financial Statements IFRS 18 Presentation and Disclosure in Financial Statements is issued by the International Accounting Standards Board (IASB). Disclaimer: To the extent permitted by applicable law, the International Accounting Standards Board (IASB) and the IFRS Foundation (Foundation) expressly disclaim all liability howsoever arising from this publication or any translation thereof whether in contract, tort or otherwise to any person in respect of any claims or losses of any nature including direct, indirect, incidental or consequential loss, punitive damages, penalties or costs. 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IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS CONTENTS from paragraph OBJECTIVE 1 SCOPE 2 GENERAL REQUIREMENTS FOR FINANCIAL STATEMENTS 9 Objective of financial statements 9 A complete set of financial statements 10 The roles of the primary financial statements and the notes 15 Identification of the financial statements 25 Frequency of reporting 28 Consistency of presentation, disclosure and classification 30 Comparative information 31 AGGREGATION AND DISAGGREGATION 41 Principles of aggregation and disaggregation 41 Offsetting 44 STATEMENT OF PROFIT OR LOSS 46 Categories in the statement of profit or loss 47 Totals and subtotals to be presented in the statement of profit or loss 69 Items to be presented in the statement of profit or loss or disclosed in the notes 75 STATEMENT PRESENTING COMPREHENSIVE INCOME 86 Other comprehensive income 88 STATEMENT OF FINANCIAL POSITION 96 Classification of assets and liabilities as current or non-current 96 Items to be presented in the statement of financial position or disclosed in the notes 103 STATEMENT OF CHANGES IN EQUITY 107 Information to be presented in the statement of changes in equity 107 Information to be presented in the statement of changes in equity or disclosed in the notes 109 NOTES 113 Structure 113 Management-defined performance measures 117 Capital 126 Other disclosures 130 APPENDICES A Defined terms B Application guidance C Effective date and transition D Amendments to other IFRS Accounting Standards © IFRS Foundation 3 APRIL 2024 International Financial Reporting Standard 18 Presentation and Disclosure in Financial Statements Objective 1 This Standard sets out requirements for the presentation and disclosure of information in general purpose financial statements (financial statements) to help ensure they provide relevant information that faithfully represents an entity’s assets, liabilities, equity, income and expenses. Scope 2 An entity shall apply this Standard in presenting and disclosing information in financial statements prepared in accordance with IFRS Accounting Standards. 3 This Standard sets out general and specific requirements for the presentation of information in the statement(s) of financial performance, the statement of financial position and the statement of changes in equity. This Standard also sets out requirements for the disclosure of information in the notes. IAS 7 Statement of Cash Flows sets out requirements for the presentation and disclosure of cash flow information. However, the general requirements for financial statements in paragraphs 9–43 and 113–114 apply to the statement of cash flows. 4 Other IFRS Accounting Standards set out the recognition, measurement, presentation and disclosure requirements for specific transactions and other events. 5 This Standard does not apply to the presentation and disclosure of information in condensed interim financial statements prepared applying IAS 34 Interim Financial Reporting. However, paragraphs 41–45 and 117–125 apply to such financial statements. 6 This Standard uses terminology that is suitable for profit-oriented entities, including public sector business entities. If entities with not-for-profit activities in the private sector or the public sector apply this Standard, they may need to amend the descriptions used for particular line items, categories, subtotals or totals in the financial statements and for the financial statements themselves. 7 Similarly, entities that do not have equity as defined in IAS 32 Financial Instruments: Presentation (for example, some mutual funds) and entities whose share capital is not equity (for example, some co-operative entities) may need to adapt the financial statement presentation of members’ or unitholders’ interests. 8 Many entities provide a financial review by management, which is separate from the financial statements (see paragraph 10), that describes and explains the main features of the entity’s financial performance and financial position, as well as the principal uncertainties it faces. Such a review is outside the scope of IFRS Accounting Standards. 4 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS General requirements for financial statements Objective of financial statements 9 The objective of financial statements is to provide financial information about a reporting entity’s assets, liabilities, equity, income and expenses that is useful to users of financial statements in assessing the prospects for future net cash inflows to the entity and in assessing management’s stewardship of the entity’s economic resources. A complete set of financial statements 10 A complete set of financial statements comprises: (a) a statement (or statements) of financial performance for the reporting period (see paragraph 12); (b) a statement of financial position as at the end of the reporting period; (c) a statement of changes in equity for the reporting period; (d) a statement of cash flows for the reporting period; (e) notes for the reporting period; (f) comparative information in respect of the preceding period as specified in paragraphs 31–32; and (g) a statement of financial position as at the beginning of the preceding period if required by paragraph 37. 11 The statements listed in paragraphs 10(a)–10(d) (and their comparative information) are referred to as the primary financial statements. An entity may use titles for the statements other than those used in this Standard. For example, an entity may use the title ‘balance sheet’ instead of ‘statement of financial position’. In addition, although this Standard uses terms such as ‘other comprehensive income’, ‘profit or loss’ and ‘total comprehensive income’, an entity may use other terms to label the totals, subtotals and line items required by this Standard as long as they are labelled in a way that faithfully represents the characteristics of the items, as required by paragraph 43. For example, an entity may use the term ‘net income’ to label ‘profit or loss’. 12 An entity shall present its statement(s) of financial performance as either: (a) a single statement of profit or loss and other comprehensive income, with profit or loss and other comprehensive income presented in two sections—if this option is chosen, an entity shall present the profit or loss section first followed directly by the other comprehensive income section; or (b) a statement of profit or loss and a separate statement presenting comprehensive income that shall begin with profit or loss—if this option is chosen, the statement of profit or loss shall immediately precede the statement presenting comprehensive income. © IFRS Foundation 5 APRIL 2024 13 In this Standard: (a) the profit or loss section described in paragraph 12(a) and the statement of profit or loss described in paragraph 12(b) are referred to as the statement of profit or loss; and (b) the other comprehensive income section described in paragraph 12(a) and the statement presenting comprehensive income described in paragraph 12(b) are referred to as the statement presenting comprehensive income. 14 An entity shall present each of the primary financial statements with equal prominence in a complete set of financial statements. The roles of the primary financial statements and the notes 15 To achieve the objective of financial statements (see paragraph 9), an entity presents information in the primary financial statements and discloses information in the notes. An entity need only present or disclose material information (see paragraphs 19 and B1–B5). 16 The role of the primary financial statements is to provide structured summaries of a reporting entity’s recognised assets, liabilities, equity, income, expenses and cash flows, that are useful to users of financial statements for: (a) obtaining an understandable overview of the entity’s recognised assets, liabilities, equity, income, expenses and cash flows; (b) making comparisons between entities, and between reporting periods for the same entity; and (c) identifying items or areas about which users of financial statements may wish to seek additional information in the notes. 17 The role of the notes is to provide material information necessary: (a) to enable users of financial statements to understand the line items presented in the primary financial statements (see paragraph B6); and (b) to supplement the primary financial statements with additional information to achieve the objective of financial statements (see paragraph B7). 18 An entity shall use the roles of the primary financial statements and the notes, described in paragraphs 16–17, to determine whether to include information in the primary financial statements or in the notes. The different roles of the primary financial statements and the notes mean that the extent of the information required in the notes differs from that in the primary financial statements. The differences mean that: 6 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (a) to provide the structured summaries described in paragraph 16, information provided in the primary financial statements is more aggregated than information provided in the notes; and (b) to provide the information described in paragraph 17, more detailed information about the entity’s assets, liabilities, equity, income, expenses and cash flows, including the disaggregation of information presented in the primary financial statements, is provided in the notes. Information presented in the primary financial statements or disclosed in the notes 19 Some IFRS Accounting Standards specify information that is required to be presented in the primary financial statements or disclosed in the notes. An entity need not provide a specific presentation or disclosure required by IFRS Accounting Standards if the information resulting from that presentation or disclosure is not material. This is the case even if IFRS Accounting Standards contain a list of specific requirements or describe them as minimum requirements. 20 An entity shall consider whether to provide additional disclosures when compliance with the specific requirements in IFRS Accounting Standards is insufficient to enable users of financial statements to understand the effect of transactions and other events and conditions on the entity’s financial position and financial performance. Information presented in the primary financial statements 21 Paragraph 16 establishes that the role of the primary financial statements is to provide structured summaries that are useful for the purposes specified in that paragraph (referred to hereafter as a useful structured summary). An entity shall use the role of the primary financial statements to determine what material information to present in those statements, as set out in paragraphs 22–24. 22 To provide a useful structured summary in a primary financial statement, an entity shall comply with specific requirements that determine the structure of the statement. The specific requirements are: (a) for the statement of profit or loss—the requirements in paragraphs 47, 69, 76 and 78; (b) for the statement presenting comprehensive income—the requirements in paragraphs 86–88; (c) for the statement of financial position—the requirements in paragraphs 96 and 104; (d) for the statement of changes in equity—the requirements in paragraph 107; and (e) for the statement of cash flows—the requirements in paragraph 10 of IAS 7. © IFRS Foundation 7 APRIL 2024 23 Some IFRS Accounting Standards require specific line items to be presented separately in the primary financial statements (for example paragraphs 75 and 103 of this Standard). An entity need not present separately a line item in a primary financial statement if doing so is not necessary for the statement to provide a useful structured summary. This is the case even if IFRS Accounting Standards contain a list of specific required line items or describe the line items as minimum requirements (see paragraph B8). 24 An entity shall present additional line items and subtotals if such presentations are necessary for a primary financial statement to provide a useful structured summary. When an entity presents additional line items or subtotals, those line items or subtotals shall (see paragraph B9): (a) comprise amounts recognised and measured in accordance with IFRS Accounting Standards; (b) be compatible with the statement structure created by the requirements listed in paragraph 22; (c) be consistent from period to period, in accordance with paragraph 30; and (d) be displayed no more prominently than the totals and subtotals required by IFRS Accounting Standards. Identification of the financial statements 25 An entity shall clearly identify the financial statements and distinguish them from other information in the same published document (see paragraph B10). 26 IFRS Accounting Standards apply only to financial statements, and not necessarily to other information provided in an annual report, a regulatory filing or another document. Therefore, it is important that users of financial statements can distinguish information that is prepared using IFRS Accounting Standards from other information that may be useful to users but is not the subject of those requirements. 27 An entity shall clearly identify each primary financial statement and the notes. In addition, an entity shall disclose prominently, and repeat when necessary for the information provided to be understandable: (a) the name of the reporting entity or other means of identification, and any change in that information from the end of the preceding reporting period; (b) whether the financial statements are of an individual entity or a group of entities; (c) the date of the end of the reporting period or the period covered by the financial statements; (d) the presentation currency, as defined in IAS 21 The Effects of Changes in Foreign Exchange Rates; and 8 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (e) the level of rounding used for the amounts in the financial statements (see paragraph B11). Frequency of reporting 28 An entity shall provide a complete set of financial statements at least annually. When an entity changes the end of its reporting period and provides financial statements for a period longer or shorter than one year, the entity shall disclose, in addition to the period covered by the financial statements: (a) the reason for using a longer or shorter period; and (b) the fact that amounts included in the financial statements are not entirely comparable. 29 Normally, an entity consistently prepares financial statements for a one-year period. However, for practical reasons, some entities prefer to report, for example, for a 52-week period. This Standard does not preclude this practice. Consistency of presentation, disclosure and classification 30 An entity shall retain the presentation, disclosure and classification of items in the financial statements from one reporting period to the next unless: (a) it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation, disclosure or classification would be more appropriate having regard to the criteria for selecting and applying accounting policies in IAS 8 Basis of Preparation of Financial Statements (see paragraph B12); or (b) an IFRS Accounting Standard requires a change in presentation, disclosure or classification. Comparative information 31 Except when IFRS Accounting Standards permit or require otherwise, an entity shall provide comparative information (that is, information for the preceding reporting period) for all amounts reported in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information if it is necessary for an understanding of the current period’s financial statements (see paragraph B13). 32 An entity shall present a current reporting period and preceding period in each of its primary financial statements and in the notes. Paragraphs B14–B15 set out requirements relating to additional comparative information. © IFRS Foundation 9 APRIL 2024 Change in accounting policy, retrospective restatement or reclassification 33 If an entity changes the presentation, disclosure or classification of items in its financial statements, it shall reclassify comparative amounts unless reclassification is impracticable. When an entity reclassifies comparative amounts, it shall disclose (including as at the beginning of the preceding period): (a) the nature of the reclassification; (b) the amount of each item or class of items that is reclassified; and (c) the reason for the reclassification. 34 When it is impracticable to reclassify comparative amounts, an entity shall disclose: (a) the reason for not reclassifying the amounts; and (b) the nature of the adjustments that would have been made if the amounts had been reclassified. 35 Enhancing the inter-period comparability of information assists users of financial statements in making economic decisions, especially by allowing the assessment of trends in information for predictive purposes. In some circumstances, it is impracticable to reclassify comparative information for a particular prior reporting period to achieve consistency with the current period. For example, an entity may not have collected data in the prior period(s) in a way that allows reclassification, and it may be impracticable to recreate the information. 36 IAS 8 sets out the adjustments to comparative information required when an entity changes an accounting policy or corrects an error. 37 An entity shall present a third statement of financial position as at the beginning of the preceding period in addition to the comparative information required in paragraphs 31–32 if: (a) it applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements; and (b) the retrospective application, retrospective restatement or reclassification has a material effect on the information in the statement of financial position as at the beginning of the preceding period. 38 In the circumstances described in paragraph 37 an entity shall present three statements of financial position—a statement of financial position as at: (a) the end of the current reporting period; (b) the end of the preceding period; and (c) the beginning of the preceding period. 10 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS 39 When an entity is required to present a third statement of financial position applying paragraph 37, it shall disclose the information required by paragraphs 33–36 and IAS 8. However, it need not provide the related notes to the statement of financial position as at the beginning of the preceding period. 40 The date of that third statement of financial position shall be as at the beginning of the preceding period regardless of whether an entity’s financial statements provide comparative information for earlier periods (as permitted by paragraphs B14–B15). Aggregation and disaggregation Principles of aggregation and disaggregation 41 For the purposes of this Standard, an item is an asset, liability, equity instrument or reserve, income, expense or cash flow or any aggregation or disaggregation of such assets, liabilities, equity, income, expenses or cash flows. A line item is an item that is presented separately in the primary financial statements. Other material information about items is disclosed in the notes. Unless doing so would override specific aggregation or disaggregation requirements in IFRS Accounting Standards, an entity shall (see paragraphs B16–B23): (a) classify and aggregate assets, liabilities, equity, income, expenses or cash flows into items based on shared characteristics; (b) disaggregate items based on characteristics that are not shared; (c) aggregate or disaggregate items to present line items in the primary financial statements that fulfil the role of the primary financial statements in providing useful structured summaries (see paragraph 16); (d) aggregate or disaggregate items to disclose information in the notes that fulfils the role of the notes in providing material information (see paragraph 17); and (e) ensure that aggregation and disaggregation in the financial statements do not obscure material information (see paragraph B3). 42 Applying the principles in paragraph 41, an entity shall disaggregate items whenever the resulting information is material. If, applying paragraph 41(c), an entity does not present material information in the primary financial statements, it shall disclose the information in the notes. Paragraphs B79 and B111 set out examples of income, expenses, assets, liabilities and items of equity that might have sufficiently dissimilar characteristics that presentation in the statement of profit or loss or statement of financial position or disclosure in the notes is necessary to provide material information. 43 An entity shall label and describe items presented in the primary financial statements (that is, totals, subtotals and line items) or items disclosed in the notes in a way that faithfully represents the characteristics of the item (see paragraphs B24–B26). To faithfully represent an item, an entity shall © IFRS Foundation 11 APRIL 2024 provide all descriptions and explanations necessary for a user of financial statements to understand the item. In some cases, an entity might need to include in the descriptions and explanations the meaning of the terms the entity uses and information about how it has aggregated or disaggregated assets, liabilities, equity, income, expenses and cash flows. Offsetting 44 An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an IFRS Accounting Standard (see paragraphs B27–B28). 45 An entity reports separately both assets and liabilities, and income and expenses. Offsetting in the statement(s) of financial performance or the statement of financial position, except when offsetting reflects the substance of the transaction or other event, reduces users’ ability to understand the transactions and other events and conditions that have occurred and to assess the entity’s future cash flows. Measuring assets net of valuation allowances— for example, obsolescence allowances on inventories and allowances for expected credit losses on financial assets—is not offsetting. Statement of profit or loss 46 An entity shall include all items of income and expense in a reporting period in the statement of profit or loss unless an IFRS Accounting Standard requires or permits otherwise (see paragraphs 88–95 and B86). Categories in the statement of profit or loss 47 An entity shall classify income and expenses included in the statement of profit or loss in one of five categories (see paragraph B29): (a) the operating category (see paragraph 52); (b) the investing category (see paragraphs 53–58); (c) the financing category (see paragraphs 59–66); (d) the income taxes category (see paragraph 67); and (e) the discontinued operations category (see paragraph 68). 48 Paragraphs 52–68 set out requirements for classifying income and expenses in the operating, investing, financing, income taxes and discontinued operations categories. In addition, paragraphs B65–B76 set out requirements on how foreign exchange differences, the gain or loss on the net monetary position, and gains and losses on derivatives and designated hedging instruments are classified in the categories. Entities with specified main business activities 49 To classify income and expenses in the operating, investing and financing categories, an entity shall assess whether it has a specified main business activity—that is a main business activity of (see paragraphs B30–B41): 12 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (a) investing in particular types of assets, referred to hereafter as investing in assets (see paragraph 53); or (b) providing financing to customers. 50 Applying paragraphs 55–58 and 65–66, an entity with a specified main business activity classifies in the operating category some income and expenses that would have been classified in the investing or financing category if the activity were not a main business activity. 51 If an entity: (a) invests in assets as a main business activity, it shall disclose that fact. (b) provides financing to customers as a main business activity, it shall disclose that fact. (c) identifies a different outcome from its assessment of whether it invests in assets or provides financing to customers as a main business activity (see paragraph B41), it shall disclose: (i) the fact the outcome of the assessment has changed and the date of the change. (ii) the amount and classification of items of income and expense before and after the date of the change in the outcome of the assessment in the current period and the amount and classification in the prior period for the items for which the classification has changed because of the changed outcome of the assessment, unless it is impracticable to do so. If an entity does not disclose the information because it is impracticable to do so, the entity shall disclose that fact. The operating category 52 An entity shall classify in the operating category all income and expenses included in the statement of profit or loss that are not classified in (see paragraph B42): (a) the investing category; (b) the financing category; (c) the income taxes category; or (d) the discontinued operations category. The investing category 53 Except as required by paragraphs 55–58 for an entity that has a specified main business activity, an entity shall classify in the investing category income and expenses specified in paragraph 54 from: (a) investments in associates, joint ventures and unconsolidated subsidiaries (see paragraphs B43–B44); (b) cash and cash equivalents; and © IFRS Foundation 13 APRIL 2024 (c) other assets if they generate a return individually and largely independently of the entity’s other resources (see paragraphs B45–B49). 54 The income and expenses from the assets identified in paragraph 53 that an entity shall classify in the investing category comprise the amounts included in the statement of profit or loss for (see paragraph B47): (a) the income generated by the assets; (b) the income and expenses that arise from the initial and subsequent measurement of the assets, including on derecognition of the assets; and (c) the incremental expenses directly attributable to the acquisition and disposal of the assets—for example, transaction costs and costs to sell the assets. Entities with specified main business activities 55 For the assets specified in paragraph 53(a) (that is, investments in associates, joint ventures and unconsolidated subsidiaries) that an entity invests in as a main business activity (see paragraph B38), the entity shall classify the income and expenses specified in paragraph 54: (a) in the investing category if the assets are accounted for applying the equity method (see paragraphs B43(a) and B44(a)); or (b) in the operating category if the assets are not accounted for applying the equity method (see paragraphs B43(b)–(c) and B44(b)–(c)). 56 For the assets specified in paragraph 53(b) (that is, cash and cash equivalents), an entity shall classify the income and expenses specified in paragraph 54 in the investing category unless: (a) it invests as a main business activity in financial assets within the scope of paragraph 53(c)—in which case it shall classify the income and expenses in the operating category. (b) it does not meet the requirements in (a) but provides financing to customers as a main business activity—in which case it shall classify: (i) the income and expenses from cash and cash equivalents that relate to providing financing to customers, for example cash and cash equivalents held for related regulatory requirements —in the operating category. (ii) the income and expenses from cash and cash equivalents that do not relate to providing financing to customers—by applying an accounting policy choice to classify the income and expenses specified in paragraph 54 in the operating category or the investing category. The choice of accounting policy shall be consistent with that made by the entity for the purpose of the related accounting policy for income and expenses from liabilities in paragraph 65(a)(ii). 14 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS 57 If an entity applying paragraph 56(b) cannot distinguish between the cash and cash equivalents described in paragraphs 56(b)(i) and 56(b)(ii), it shall apply the accounting policy choice in paragraph 56(b)(ii) to classify income and expenses from all cash and cash equivalents in the operating category. 58 For the assets specified in paragraph 53(c) (that is, other assets if they generate a return individually and largely independently of the entity’s other resources) that an entity invests in as a main business activity (see paragraph B40), the entity shall classify the income and expenses specified in paragraph 54 in the operating category. The financing category 59 To determine what income and expenses to classify in the financing category, an entity shall distinguish between: (a) liabilities that arise from transactions that involve only the raising of finance (see paragraphs B50–B51); and (b) liabilities other than those described in (a)—that is, liabilities that arise from transactions that do not involve only the raising of finance (see paragraph B53). 60 For the liabilities specified in paragraph 59(a) (that is, liabilities that arise from transactions that involve only the raising of finance), except as set out in paragraphs 63–66, an entity shall classify in the financing category the amounts included in the statement of profit or loss for: (a) income and expenses that arise from the initial and subsequent measurement of the liabilities, including on derecognition of the liabilities (see paragraph B52); and (b) the incremental expenses directly attributable to the issue and extinguishment of the liabilities—for example, transaction costs. 61 For the liabilities specified in paragraph 59(b) (that is, liabilities that arise from transactions that do not involve only the raising of finance), except as set out in paragraphs 63–64, an entity shall classify in the financing category: (a) interest income and expenses, but only if the entity identifies such income and expenses for the purpose of applying other requirements in IFRS Accounting Standards; and (b) income and expenses arising from changes in interest rates, but only if the entity identifies such income and expenses for the purpose of applying other requirements in IFRS Accounting Standards. 62 Paragraphs B56–B57 set out how an entity shall apply the requirements in paragraphs 59–61 to hybrid contracts that contain a host that is a liability. 63 The requirements in paragraphs 60–61 do not apply to gains and losses on derivatives and designated hedging instruments. An entity shall apply paragraphs B70–B76 to classify such gains and losses. © IFRS Foundation 15 APRIL 2024 64 An entity shall exclude from the financing category and classify in the operating category: (a) income and expenses from issued investment contracts with participation features recognised applying IFRS 9 Financial Instruments (see paragraph B58); and (b) insurance finance income and expenses included in the statement of profit or loss applying IFRS 17 Insurance Contracts. Entities with specified main business activities 65 If an entity provides financing to customers as a main business activity, it shall classify income and expenses (see paragraph B59): (a) from the liabilities specified in paragraph 59(a) (that is, liabilities that arise from transactions that involve only the raising of finance): (i) if the liabilities relate to providing financing to customers—in the operating category. (ii) if the liabilities do not relate to providing financing to customers—by applying an accounting policy choice to classify the income and expenses specified in paragraph 60 in the operating category or the financing category. The choice of accounting policy shall be consistent with that made by the entity for the purpose of the related accounting policy for income and expenses from cash and cash equivalents in paragraph 56(b)(ii). (b) from the liabilities specified in paragraph 59(b) (that is, liabilities that arise from transactions that do not involve only the raising of finance): (i) if the income and expenses are specified in paragraph 61—in the financing category; or (ii) if the income and expenses are not specified in paragraph 61— in the operating category. 66 If an entity applying paragraph 65(a) cannot distinguish between the liabilities described in paragraphs 65(a)(i) and 65(a)(ii), it shall apply the accounting policy choice in paragraph 65(a)(ii) to classify income and expenses from all such liabilities in the operating category. The income taxes category 67 An entity shall classify in the income taxes category tax expense or tax income that is included in the statement of profit or loss applying IAS 12 Income Taxes, and any related foreign exchange differences (see paragraphs B65–B68). The discontinued operations category 68 An entity shall classify in the discontinued operations category income and expenses from discontinued operations as required by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. 16 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS Totals and subtotals to be presented in the statement of profit or loss 69 An entity shall present totals and subtotals in the statement of profit or loss for: (a) operating profit or loss (see paragraph 70); (b) profit or loss before financing and income taxes (see paragraph 71), subject to paragraph 73; and (c) profit or loss (see paragraph 72). 70 Operating profit or loss comprises all income and expenses classified in the operating category. 71 Profit or loss before financing and income taxes comprises: (a) operating profit or loss; and (b) all income and expenses classified in the investing category. 72 Profit or loss is the total of income less expenses included in the statement of profit or loss. Accordingly, it comprises all income and expenses classified in all categories in the statement of profit or loss (see paragraph 47). 73 An entity shall not apply paragraph 69(b) if it applies the accounting policy set out in paragraph 65(a)(ii) of classifying in the operating category income and expenses from liabilities that do not relate to the provision of financing to customers. However, such an entity shall apply paragraph 24 to determine whether to present an additional subtotal after operating profit and before the financing category. For example, the entity would present a subtotal for operating profit or loss and income and expenses from investments accounted for using the equity method if the entity determines doing so is necessary to provide a useful structured summary of its income and expenses. 74 If an entity described in paragraph 73 presents an additional subtotal comprising operating profit or loss and all income and expenses classified in the investing category, it shall not label the subtotal in a way that implies the subtotal excludes financing amounts, such as ‘profit before financing’. Applying paragraph 43, the entity shall label the subtotal in a way that faithfully represents the amounts included in the subtotal. Items to be presented in the statement of profit or loss or disclosed in the notes 75 An entity shall present in the statement of profit or loss line items for (see paragraph B77): (a) amounts required by this Standard, namely: (i) revenue, presenting separately the line items described in (b) (i) and (c)(i); (ii) operating expenses, presenting separately line items as required by paragraphs 78 and 82(a); © IFRS Foundation 17 APRIL 2024 (iii) share of the profit or loss of associates and joint ventures accounted for using the equity method; (iv) income tax expense or income; and (v) a single amount for the total of discontinued operations (see IFRS 5); (b) amounts required by IFRS 9, namely: (i) interest revenue calculated using the effective interest method; (ii) impairment losses (including reversals of impairment losses or impairment gains) determined in accordance with Section 5.5 of IFRS 9; (iii) gains and losses arising from the derecognition of financial assets measured at amortised cost; (iv) any gain or loss arising from the difference between the fair value of a financial asset and its previous amortised cost at the date of reclassification from amortised cost measurement to measurement at fair value through profit or loss; and (v) any cumulative gain or loss previously recognised in other comprehensive income that is reclassified to profit or loss at the date of reclassification of a financial asset from measurement at fair value through other comprehensive income to measurement at fair value through profit or loss; and (c) amounts required by IFRS 17, namely: (i) insurance revenue; (ii) insurance service expenses from contracts issued within the scope of IFRS 17; (iii) income or expenses from reinsurance contracts held; (iv) insurance finance income or expenses from contracts issued within the scope of IFRS 17; and (v) finance income or expenses from reinsurance contracts held. 76 An entity shall present in the statement of profit or loss (outside all the categories described in paragraph 47) an allocation of profit or loss for the reporting period attributable to: (a) non-controlling interests; and (b) owners of the parent. 77 Paragraphs B78–B79 set out requirements on how an entity uses its judgement to determine whether to present additional line items in the statement of profit or loss or disclose items in the notes. 18 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS Presentation and disclosure of expenses classified in the operating category 78 In the operating category of the statement of profit or loss, an entity shall classify and present expenses in line items in a way that provides the most useful structured summary of its expenses, using one or both of these characteristics (see paragraphs B80–B85): (a) the nature of expenses; or (b) the function of the expenses within the entity. 79 Any individual line item shall comprise operating expenses aggregated on the basis of only one of these characteristics, but the same characteristic does not have to be used as the aggregation basis for all line items (see paragraph B81). 80 In classifying expenses by nature (‘nature expenses’), an entity provides information about operating expenses related to the nature of the economic resources consumed to accomplish the entity’s activities without reference to the activities in relation to which those economic resources were consumed. Such information includes information about raw material expense, employee benefit expense, depreciation and amortisation. 81 In classifying expenses by function within the entity, an entity allocates and aggregates operating expenses according to the activity to which the consumed resource relates. For example, cost of sales is a function line item that combines expenses relating to an entity’s production or other revenue- generating activities such as: raw material expense, employee benefit expense, depreciation and amortisation. Therefore, when classifying expenses by function, an entity might: (a) allocate to several function line items (such as cost of sales and research and development) expenses relating to economic resources of the same nature (such as employee benefit expense); and (b) include in a single function line item an allocation of expenses relating to economic resources of several natures (such as raw material expense, employee benefit expense, depreciation and amortisation). 82 If an entity presents one or more line items comprising expenses classified by function in the operating category of the statement of profit or loss, it shall: (a) present a separate line item for its cost of sales, if the entity classifies operating expenses in functions that include a cost of sales function. That line item shall include the total of inventory expense described in paragraph 38 of IAS 2 Inventories. (b) disclose a qualitative description of the nature of expenses included in each function line item. 83 An entity that presents one or more line items comprising expenses classified by function in the operating category of the statement of profit or loss shall also disclose in a single note: (a) the total for each of: © IFRS Foundation 19 APRIL 2024 (i) depreciation, comprising the amounts required to be disclosed by paragraph 73(e)(vii) of IAS 16 Property, Plant and Equipment, paragraph 79(d)(iv) of IAS 40 Investment Property and paragraph 53(a) of IFRS 16 Leases; (ii) amortisation, comprising the amount required to be disclosed by paragraph 118(e)(vi) of IAS 38 Intangible Assets; (iii) employee benefits, comprising the amount for employee benefits recognised by an entity applying IAS 19 Employee Benefits and the amount for services received from employees recognised by an entity applying IFRS 2 Share-based Payment; (iv) impairment losses and reversals of impairment losses, comprising the amounts required to be disclosed by paragraphs 126(a) and 126(b) of IAS 36 Impairment of Assets; and (v) write-downs and reversals of write-downs of inventories, comprising the amounts required to be disclosed by paragraphs 36(e) and 36(f) of IAS 2; and (b) for each total listed in (a)(i)–(v): (i) the amount related to each line item in the operating category (see paragraph B84); and (ii) a list of any line items outside the operating category that also include amounts relating to the total. 84 Paragraph 41 requires an entity to disaggregate items to provide material information. However, an entity that applies paragraph 83 is exempt from disclosing: (a) in relation to function line items presented in the operating category of the statement of profit or loss—disaggregated information about the amounts of nature expenses included in each line item, beyond the amounts specified in paragraph 83; and (b) in relation to nature expenses specifically required by an IFRS Accounting Standard to be disclosed in the notes—disaggregated information about the amounts of the expenses included in each function line item presented in the operating category of the statement of profit or loss, beyond the amounts specified in paragraph 83. 85 The exemption in paragraph 84 relates to disaggregation of operating expenses. However, it does not exempt an entity from applying specific disclosure requirements relating to those expenses in IFRS Accounting Standards. 20 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS Statement presenting comprehensive income 86 An entity shall present in the statement presenting comprehensive income totals for: (a) profit or loss; (b) other comprehensive income (see paragraphs B86–B87); and (c) comprehensive income, being the total of profit or loss and other comprehensive income. 87 An entity shall present an allocation of comprehensive income for the reporting period attributable to: (a) non-controlling interests; and (b) owners of the parent. Other comprehensive income 88 An entity shall classify income and expenses included in the statement presenting comprehensive income in one of two categories: (a) income and expenses that will be reclassified to profit or loss when specific conditions are met; and (b) income and expenses that will not be reclassified to profit or loss. 89 An entity shall present, in each of the categories of the statement presenting comprehensive income, line items for: (a) the share of other comprehensive income of associates and joint ventures accounted for using the equity method; and (b) other items of other comprehensive income. 90 An entity shall present in the statement presenting comprehensive income or disclose in the notes reclassification adjustments relating to components of other comprehensive income (see paragraphs B88–B89). 91 Other IFRS Accounting Standards specify whether and when amounts previously included in other comprehensive income are reclassified to profit or loss. Such reclassifications are referred to in this Standard as reclassification adjustments. An entity includes a reclassification adjustment with the related component of other comprehensive income in the period that the adjustment is reclassified to profit or loss. An entity might have included these amounts in other comprehensive income as unrealised gains in the current or prior periods. An entity shall deduct them from other comprehensive income in the period in which the realised gains are reclassified to profit or loss to avoid including them in total comprehensive income twice. 92 An entity disclosing reclassification adjustments in the notes shall present in the statement presenting comprehensive income the items of other comprehensive income after any related reclassification adjustments. © IFRS Foundation 21 APRIL 2024 93 An entity shall either present in the statement presenting comprehensive income or disclose in the notes the amount of income taxes relating to each item of other comprehensive income, including reclassification adjustments (see paragraphs 61A and 63 of IAS 12). 94 An entity may present items of other comprehensive income either: (a) net of related tax effects; or (b) before related tax effects, with one amount shown for the aggregate amount of income taxes relating to those items. 95 If an entity selects the alternative in paragraph 94(b), it shall allocate the tax between the categories set out in paragraph 88. Statement of financial position Classification of assets and liabilities as current or non- current 96 An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position in accordance with paragraphs 99–102 except when a presentation based on liquidity provides a more useful structured summary. When that exception applies, an entity shall present all assets and liabilities in order of liquidity (see paragraphs B90–B93). 97 Whichever method of presentation is adopted, an entity shall disclose the amount expected to be recovered or settled after more than 12 months for each asset and liability line item that combines amounts expected to be recovered or settled: (a) no more than 12 months after the reporting period; and (b) more than 12 months after the reporting period. 98 When an entity presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities). Current assets 99 An entity shall classify an asset as current when (see paragraphs B94–B95): (a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle; (b) it holds the asset primarily for the purpose of trading; (c) it expects to realise the asset within 12 months after the reporting period; or (d) the asset is cash or a cash equivalent (as defined in IAS 7), unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. 22 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS 100 An entity shall classify all assets other than those specified in paragraph 99 as non-current. Current liabilities 101 An entity shall classify a liability as current when: (a) it expects to settle the liability in its normal operating cycle (see paragraphs B96 and B107–B108); (b) it holds the liability primarily for the purpose of trading (see paragraph B97); (c) the liability is due to be settled within 12 months after the reporting period (see paragraphs B97–B98 and B107–B108); or (d) it does not have the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period (see paragraphs B99–B108). 102 An entity shall classify all liabilities other than those specified in paragraph 101 as non-current. Items to be presented in the statement of financial position or disclosed in the notes 103 An entity shall present in the statement of financial position line items for: (a) property, plant and equipment; (b) investment property; (c) intangible assets; (d) goodwill; (e) financial assets (excluding amounts shown under (g), (j) and (k)); (f) portfolios of contracts within the scope of IFRS 17 that are assets, disaggregated as required by paragraph 78 of IFRS 17; (g) investments accounted for using the equity method; (h) biological assets within the scope of IAS 41 Agriculture; (i) inventories; (j) trade and other receivables; (k) cash and cash equivalents; (l) the total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with IFRS 5; (m) trade and other payables; (n) provisions; (o) financial liabilities (excluding amounts shown under (m) and (n)); © IFRS Foundation 23 APRIL 2024 (p) portfolios of contracts within the scope of IFRS 17 that are liabilities, disaggregated as required by paragraph 78 of IFRS 17; (q) liabilities and assets for current tax, as defined in IAS 12; (r) deferred tax liabilities and deferred tax assets, as defined in IAS 12; and (s) liabilities included in disposal groups classified as held for sale in accordance with IFRS 5. 104 An entity shall present in the statement of financial position: (a) non-controlling interests; and (b) issued capital and reserves attributable to owners of the parent. 105 Paragraphs B109–B111 set out requirements on how an entity uses its judgement to determine whether to present additional line items in the statement of financial position or disclose items in the notes. 106 Subject to paragraph 96, this Standard does not prescribe the order or format in which an entity presents items in the statement of financial position. In addition, the descriptions used and the ordering of items or aggregation of similar items may be amended according to the nature of the entity and its transactions, to provide a useful structured summary of the entity’s assets, liabilities and equity. For example, a financial institution may amend the descriptions in paragraph 103 to provide a useful structured summary of the assets, liabilities and equity of a financial institution. Statement of changes in equity Information to be presented in the statement of changes in equity 107 An entity shall present a statement of changes in equity as required by paragraph 10. The statement of changes in equity shall include: (a) total comprehensive income for the reporting period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests; (b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with IAS 8; and (c) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately (as a minimum) presenting changes resulting from: (i) profit or loss; (ii) other comprehensive income; and 24 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (iii) transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control. 108 IAS 8 requires retrospective adjustments for changes in accounting policies, to the extent practicable, except when the transition requirements in another IFRS Accounting Standard require otherwise. IAS 8 also requires restatements to correct errors to be made retrospectively, to the extent practicable. Retrospective adjustments and retrospective restatements are not changes in equity, but they are adjustments to the opening balance of retained earnings, except when IFRS Accounting Standards require retrospective adjustment of another component of equity. Paragraph 107(b) requires an entity to present in the statement of changes in equity the total adjustment to each component of equity resulting from changes in accounting policies and, separately, from corrections of errors. An entity shall present these adjustments for each prior reporting period and the beginning of the period. Information to be presented in the statement of changes in equity or disclosed in the notes 109 For each component of equity an entity shall either present in the statement of changes in equity or disclose in the notes an analysis of other comprehensive income by item (see paragraph 107(c)(ii)). 110 An entity shall either present in the statement of changes in equity or disclose in the notes the amount of dividends recognised as distributions to owners during the reporting period, and the related amount of dividends per share. 111 In paragraph 107, the components of equity include, for example, each class of contributed equity, the accumulated balance of each class of other comprehensive income and retained earnings. 112 Changes in an entity’s equity between the beginning and the end of the reporting period reflect the increase or decrease in its net assets during the period. Except for changes resulting from transactions with owners in their capacity as owners (such as equity contributions, reacquisitions of the entity’s own equity instruments and dividends) and transaction costs directly related to such transactions, the overall change in equity during a period represents the total amount of income and expenses, including gains and losses, generated by the entity’s activities during that period. Notes Structure 113 An entity shall disclose in the notes: (a) information about the basis of preparation of the financial statements (see paragraphs 6A–6N of IAS 8) and the specific accounting policies used (see paragraphs 27A–27I of IAS 8); © IFRS Foundation 25 APRIL 2024 (b) information required by IFRS Accounting Standards that is not presented in the primary financial statements; and (c) other information that is not presented in the primary financial statements, but is necessary for an understanding of any of them (see paragraph 20). 114 An entity shall, as far as practicable, present notes in a systematic manner (see paragraph B112). In determining a systematic manner, the entity shall consider the effect on the understandability and comparability of its financial statements. An entity shall cross-reference each item in the primary financial statements to any related information in the notes. If amounts disclosed in the notes are included in one or more line items in the primary financial statements, an entity shall disclose in the note the line item(s) in which the amounts are included. 115 An entity may disclose notes providing information about the basis of preparation of the financial statements and specific accounting policies used in a separate section of the financial statements. 116 If not disclosed elsewhere in information published with the financial statements, an entity shall disclose in the notes: (a) the domicile and legal form of the entity, its country of incorporation and the address of its registered office (or principal place of business, if different from the registered office); (b) a description of the nature of the entity’s operations and its principal activities; (c) the name of the parent and the ultimate parent of the group; and (d) if it is a limited-life entity, information regarding the length of its life. Management-defined performance measures Identification of management-defined performance measures 117 A management-defined performance measure is a subtotal of income and expenses that (see paragraphs B113–B122): (a) an entity uses in public communications outside financial statements; (b) an entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole; and (c) is not listed in paragraph 118, or specifically required to be presented or disclosed by IFRS Accounting Standards. 118 Subtotals of income and expenses that are not management-defined performance measures are: 26 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (a) gross profit or loss (revenue minus cost of sales) and similar subtotals (see paragraph B123); (b) operating profit or loss before depreciation, amortisation and impairments within the scope of IAS 36; (c) operating profit or loss and income and expenses from all investments accounted for using the equity method; (d) for an entity that applies paragraph 73, a subtotal comprising operating profit or loss and all income and expenses classified in the investing category; (e) profit or loss before income taxes; and (f) profit or loss from continuing operations. 119 An entity shall presume that a subtotal of income and expenses that it uses in public communications outside its financial statements communicates to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole, unless, applying paragraph 120, the entity rebuts the presumption. 120 An entity is permitted to rebut the presumption described in paragraph 119 and assert that a subtotal does not communicate management’s view of an aspect of the financial performance of the entity as a whole, but only if it has reasonable and supportable information available that demonstrates the basis for the assertion (see paragraphs B124–B131). Disclosure of management-defined performance measures 121 The objective of the disclosures for management-defined performance measures is for an entity to provide information to help a user of financial statements understand: (a) the aspect of financial performance that, in management’s view, is communicated by a management-defined performance measure; and (b) how the management-defined performance measure compares with the measures defined by IFRS Accounting Standards. 122 An entity shall disclose information about all measures that meet the definition of management-defined performance measures in paragraph 117 in a single note (see paragraphs B132–B133). This note shall include a statement that the management-defined performance measures provide management’s view of an aspect of the financial performance of the entity as a whole and are not necessarily comparable with measures sharing similar labels or descriptions provided by other entities. 123 An entity shall label and describe each management-defined performance measure in a clear and understandable manner that does not mislead users of financial statements (see paragraphs B134–B135). For each management- defined performance measure, the entity shall disclose: © IFRS Foundation 27 APRIL 2024 (a) a description of the aspect of financial performance that, in management’s view, is communicated by the management-defined performance measure. This description shall include explanations of why, in management’s view, the management-defined performance measure provides useful information about the entity’s financial performance. (b) how the management-defined performance measure is calculated. (c) a reconciliation between the management-defined performance measure and the most directly comparable subtotal listed in paragraph 118 or total or subtotal specifically required to be presented or disclosed by IFRS Accounting Standards (see paragraphs B136–B140). (d) the income tax effect (determined by applying paragraph B141) and the effect on non-controlling interests for each item disclosed in the reconciliation required by (c). (e) a description of how the entity applies paragraph B141 to determine the income tax effect required by (d). 124 If an entity changes how it calculates a management-defined performance measure, adds a new management-defined performance measure, ceases using a previously disclosed management-defined performance measure or changes how it determines the income tax effects of the reconciling items required by paragraph 123(d), it shall disclose: (a) an explanation that enables users of financial statements to understand the change, addition or cessation and its effects. (b) the reasons for the change, addition or cessation. (c) restated comparative information to reflect the change, addition or cessation unless it is impracticable to do so. An entity’s selection of a management-defined performance measure is not an accounting policy choice. Nonetheless, in assessing whether restating the comparative information is impracticable, an entity shall apply the requirements in paragraphs 50–53 of IAS 8. 125 If an entity does not disclose the restated comparative information required by paragraph 124(c) because it is impracticable to do so, it shall disclose that fact. Capital 126 An entity shall disclose in the notes information that enables users of financial statements to evaluate the entity’s objectives, policies and processes for managing capital. 127 To comply with paragraph 126 an entity shall disclose in the notes: (a) qualitative information about its objectives, policies and processes for managing capital, including: 28 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (i) a description of what it manages as capital; (ii) when an entity is subject to externally imposed capital requirements, the nature of those requirements and how those requirements are incorporated into the management of capital; and (iii) how it is meeting its objectives for managing capital. (b) summary quantitative data about what it manages as capital. Some entities regard some financial liabilities (for example, some forms of subordinated debt) as part of capital. Other entities regard capital as excluding some components of equity (for example, components arising from cash flow hedges). (c) any changes in (a) and (b) from the preceding reporting period. (d) whether during the reporting period it complied with any externally imposed capital requirements to which it is subject. (e) when it has not complied with such externally imposed capital requirements, the consequences of such non-compliance. 128 An entity shall base the note disclosures in paragraph 127 on the information provided internally to key management personnel. 129 An entity may manage capital in a number of ways and be subject to a number of different capital requirements. For example, a conglomerate may include entities that undertake insurance activities and banking activities and those entities may operate in several jurisdictions. When an aggregate disclosure of capital requirements and how capital is managed would not provide useful information or would distort a financial statement user’s understanding of an entity’s capital resources, the entity shall disclose separate information for each capital requirement to which the entity is subject. Other disclosures 130 An entity shall either present in the statement of financial position or the statement of changes in equity or disclose in the notes: (a) for each class of share capital: (i) the number of shares authorised; (ii) the number of shares issued and fully paid, and issued but not fully paid; (iii) par value per share, or a statement that the shares have no par value; (iv) a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period; © IFRS Foundation 29 APRIL 2024 (v) the rights, preferences and restrictions attaching to that class, including restrictions on the distribution of dividends and the repayment of capital; (vi) shares in the entity held by the entity or by its subsidiaries or associates; and (vii) shares reserved for issue under options and contracts for the sale of shares, including terms and amounts; and (b) a description of the nature and purpose of each reserve within equity. 131 An entity without share capital, such as a partnership or trust, shall disclose information equivalent to that required by paragraph 130(a), showing changes during the reporting period in each category of equity interest, and the rights, preferences and restrictions attaching to each category of equity interest. 132 An entity shall disclose in the notes: (a) the amount of dividends proposed or declared before the financial statements were authorised for issue but not recognised as a distribution to owners during the reporting period, and the related amount per share; and (b) the amount of any cumulative preference dividends not recognised. 30 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS Appendix A Defined terms This appendix is an integral part of the IFRS Accounting Standard. aggregation The adding together of assets, liabilities, equity, income, expenses or cash flows that share characteristics and are included in the same classification. classification The sorting of assets, liabilities, equity, income, expenses and cash flows based on shared characteristics. disaggregation The separation of an item into component parts that have characteristics that are not shared. general purpose Reports that provide financial information about a reporting financial reports entity that is useful to primary users in making decisions relating to providing resources to the entity. Those decisions involve decisions about: (a) buying, selling or holding equity and debt instruments; (b) providing or selling loans and other forms of credit; or (c) exercising rights to vote on, or otherwise influence, the entity’s management’s actions that affect the use of the entity’s economic resources. General purpose financial reports include—but are not restricted to—an entity’s general purpose financial statements and sustainability-related financial disclosures. general purpose A particular form of general purpose financial reports that provide financial statements information about the reporting entity’s assets, liabilities, equity, income and expenses. IFRS Accounting Accounting standards issued by the International Accounting Standards Standards Board. They comprise: (a) International Financial Reporting Standards; (b) International Accounting Standards; (c) IFRIC Interpretations; and (d) SIC Interpretations. IFRS Accounting Standards were previously known as International Financial Reporting Standards, IFRS, IFRSs and IFRS Standards. management-defined A subtotal of income and expenses that: performance measure (a) an entity uses in public communications outside financial statements; © IFRS Foundation 31 APRIL 2024 (b) an entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole; and (c) is not listed in paragraph 118 of IFRS 18, or specifically required to be presented or disclosed by IFRS Accounting Standards. material information Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. notes Information in financial statements provided in addition to that presented in the primary financial statements. operating profit or The total of all income and expenses classified in the operating loss category. other comprehensive Items of income and expense (including reclassification income adjustments) that are recognised outside profit or loss as required or permitted by other IFRS Accounting Standards. owners Holders of claims classified as equity. primary financial The statement(s) of financial performance, the statement of statements financial position, the statement of changes in equity and the statement of cash flows. profit or loss The total of income less expenses included in the statement of profit or loss. profit or loss before The total of operating profit or loss and all income and financing and income expenses classified in the investing category. taxes reclassification Amounts reclassified to profit or loss in the current reporting adjustments period that were included in other comprehensive income in the current or prior periods. total comprehensive The change in equity during a reporting period resulting from income transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners. useful structured A structured summary provided in a primary financial summary statement of a reporting entity’s recognised assets, liabilities, equity, income, expenses and cash flows that is useful for: (a) obtaining an understandable overview of the entity’s recognised assets, liabilities, equity, income, expenses and cash flows; (b) making comparisons between entities, and between reporting periods for the same entity; and 32 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS (c) identifying items or areas about which users of financial statements may wish to seek additional information in the notes. © IFRS Foundation 33 APRIL 2024 Appendix B Application guidance This appendix is an integral part of the IFRS Accounting Standard. It describes the application of paragraphs 1–132 and has the same authority as the other parts of the IFRS Accounting Standard. General requirements for financial statements Materiality B1 Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. B2 Materiality depends on the nature or magnitude of information, or both. An entity assesses whether information, either individually or in combination with other information, is material in the context of its financial statements taken as a whole. B3 Information is obscured if it is communicated in a way that would have a similar effect for primary users of financial statements to omitting or misstating that information. The following are examples of circumstances that may result in material information being obscured: (a) material information about an item, transaction or other event is disclosed in the financial statements but the language used is vague or unclear; (b) material information about an item, transaction or other event is scattered throughout the financial statements; (c) dissimilar items, transactions or other events are inappropriately aggregated; (d) similar items, transactions or other events are inappropriately disaggregated; and (e) the understandability of the financial statements is reduced as a result of material information being hidden by immaterial information to the extent that a primary user is unable to determine what information is material. B4 Assessing whether information could reasonably be expected to influence decisions made by the primary users of a specific reporting entity’s general purpose financial statements requires an entity to consider the characteristics of those users while also considering the entity’s own circumstances. B5 Many existing and potential investors, lenders and other creditors cannot require reporting entities to provide information directly to them and must rely on general purpose financial statements for much of the financial information they need. Consequently, they are the primary users to whom 34 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS general purpose financial statements are directed. Financial statements are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the information diligently. At times, even well-informed and diligent users may need to seek the aid of an adviser to understand information about complex economic phenomena. The roles of the primary financial statements and the notes B6 Applying paragraph 17(a), an entity provides in the notes information necessary for users of financial statements to understand the line items presented in the primary financial statements. Examples of such information include: (a) disaggregation of the line items presented in the primary financial statements; (b) descriptions of the characteristics of the line items presented in the primary financial statements; and (c) information about the methods, assumptions and judgements used in recognising, measuring and presenting the items included in the primary financial statements. B7 Applying paragraph 17(b), an entity supplements the primary financial statements with additional information necessary to achieve the objective of financial statements—that is: (a) information specifically required by IFRS Accounting Standards (see paragraph 19)—for example: (i) information required by IAS 37 Provisions, Contingent Liabilities and Contingent Assets about an entity’s unrecognised contingent assets and contingent liabilities; and (ii) information required by IFRS 7 Financial Instruments: Disclosures about an entity’s exposure to various types of risks, such as credit risk, liquidity risk and market risk; and (b) information additional to that specifically required by IFRS Accounting Standards (see paragraph 20). Information presented in the primary financial statements B8 Paragraph 23 explains that an entity need not present separately a line item in a primary financial statement if doing so is not necessary for the statement to provide a useful structured summary, even if the line item is required by IFRS Accounting Standards. For example, an entity need not present a line item listed in paragraph 75 if doing so is not necessary for the statement of profit or loss to provide a useful structured summary of income and expenses, or a line item listed in paragraph 103 if doing so is not necessary for the statement of financial position to provide a useful structured summary of assets, liabilities and equity. If an entity does not present the line items listed in © IFRS Foundation 35 APRIL 2024 paragraphs 75 and 103, it shall disclose the items in the notes if the resulting information is material (see paragraph 42). B9 Conversely, applying paragraph 24, an entity shall present additional line items to those listed in paragraphs 75 and 103 if such presentations are necessary for the statement of profit or loss to provide a useful structured summary of income and expenses or for the statement of financial position to provide a useful structured summary of assets, liabilities and equity (see paragraphs B78–B79 and B109–B111). Identification of the financial statements B10 Paragraph 25 requires an entity to clearly identify the financial statements and distinguish them from other information in the same published document. An entity meets these requirements by providing appropriate headings for pages, statements, notes, columns and the like. Judgement is required in determining the best way of providing such information. For example, if an entity provides the financial statements electronically, an entity considers other ways to meet the requirements—for example, by appropriate digital tagging of information provided in the financial statements. B11 An entity often makes financial statements more understandable by providing information in thousands or millions of units of the presentation currency. This practice is acceptable as long as the entity discloses the level of rounding and does not omit material information. Consistency of presentation, disclosure and classification B12 Paragraph 30(a) requires an entity to change the presentation, disclosure or classification of items in the financial statements if it is apparent that another presentation, disclosure or classification would be more appropriate. For example, a significant acquisition or disposal, or a review of the financial statements, might suggest that the financial statements need to be changed. An entity is permitted to change the presentation, disclosure or classification of items in its financial statements only if the change provides information that is more useful to users of financial statements and if the entity is likely to continue using the revised presentation, disclosure or classification, so that inter-period comparability is not impaired. When making such changes, an entity reclassifies its comparative information in accordance with paragraphs 33–34. Comparative information Required comparative information B13 In some cases, narrative information provided in the financial statements for the preceding reporting period(s) continues to be relevant in the current period. For example, an entity discloses in the current period details of a legal dispute, the outcome of which was uncertain at the end of the preceding 36 © IFRS Foundation IFRS 18 PRESENTATION AND DISCLOSURE IN FINANCIAL STATEMENTS period and is yet to be resolved. Users of financial statements might benefit from the disclosure of information that the uncertainty existed at the end of the preceding period and from the disclosure of information about the steps that have been taken during the period to resolve the uncertainty. Additional comparative information B14 An entity may provide comparative information in addition to the comparative information required by IFRS Accounting Standards, as long as that information is prepared in accordance with IFRS Accounting Standards. This additional comparative information may consist of one or more of the primary financial statements referred to in paragraph 10, but need not comprise a complete set of financial statements. When this is the case, the entity shall disclose in the notes information for those additional primary financial statements. B15 For example, an entity may present a third statement (or statements) of financial performance (thereby presenting the current reporting period, the preceding period and one additional comparative period). However, the entity is not required to present a third statement of financial position, a third statement of cash flows or a third statement of changes in equity (that is, an additional primary financial statement comparative). The entity is required to disclose in the notes the comparative information related to that additional statement(s) of financial performance. Aggregation and disaggregation Principles of aggregation and disaggregation Process of aggregation and disaggregation B16 Financial statements result from entities processing large numbers of transactions and other events. These transactions and other events give rise to assets, liabilities, equity, income, expenses and cash flows. B17 To apply the requirements in paragraph 41, an entity shall aggregate items based on shared characteristics (that is, aggregate items that have similar characteristics) and disaggregate items based on characteristics that are not shared (that is, disaggregate items that have dissimilar characteristics). In doing so, an entity shall: (a) identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual tr

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