Unlike IAS 1, which did not require any specific presentation format for financial statements in general, groupings, or subtotals making presentation easy; IFRS 18 comes with a precise structure for financial statements.
The standard provides five categories for classifying expenses and income in the income statement:
includes expenses and income arising from the company's main or ancillary activities, including exceptional items.
groups expenses and income that arise either from an investment or relate to cash or cash equivalents or are linked to other assets that generate income individually and largely independently.
includes expenses and income involving only financing or discounting effects.
this refers to income tax, in the context of the DRC, corporate tax (IS).
takes into account expenses and income from discontinued operations as defined by IFRS 5.
Three subtotals are indicated by the standard:
- Operating profit after the cascade of the operating section;
- Profit before financing and tax;
- Net profit.
In order to comply with the standard, entities must choose the method of presenting expenses and income:
- Either a classification by function,
- Or by nature
- Or adopt a mixed presentation.
includes expenses and income arising from the company's main or ancillary activities, including exceptional items.
groups expenses and income that arise either from an investment or relate to cash or cash equivalents or are linked to other assets that generate income individually and largely independently.
includes expenses and income involving only financing or discounting effects.
this refers to income tax, in the context of the DRC, corporate tax (IS).
takes into account expenses and income from discontinued operations as defined by IFRS 5.
Three subtotals are indicated by the standard:
- Operating profit after the cascade of the operating section;
- Profit before financing and tax;
- Net profit.
In order to comply with the standard, entities must choose the method of presenting expenses and income:
- Either a classification by function,
- Or by nature
- Or adopt a mixed presentation.
The standard also introduces the concept of MPM "Management performance measures" which is a subtotal of income and expenses defined by management and which are included in the income statement if:
1
They are used in public communications outside of the financial statements
2
Management communicates through it its view on an aspect of the company's performance
3
It is not required or specified by IFRS 18 or any other IFRS standard.
MPMs must be published in a single note to the financial statements specifying:
This description must include explanations of why, in management's opinion, the performance measure defined by it provides useful information about the entity's financial performance.
A reconciliation between the performance measure defined by management and the subtotal of IFRS 18 that is most directly comparable, the total or subtotal specifically required to be presented or disclosed by IFRS standards.
Show and explain how the performance measure has been calculated
If an entity modifies the calculation method of a performance measure defined by management, adds a new performance measure defined by management, ceases to use a previously published performance measure defined by management, or changes the way it determines the tax implications of reconciling items; it must provide an explanation that allows users of the financial statements to understand the modification, addition, or removal and its implications.
