To improve the structure of the statement of profit or loss, IFRS 18 Presentation and Disclosure in Financial Statements introduces:
- Three new defined categories to provide a consistent structure of the statement of profit or loss:
- Operating
- Investing
- Financing
- Two new required subtotals to enable analysis:
- Operating profit
- Profit before financing and taxes
These changes do not affect the overall financial performance of a company. However, companies must carefully analyse these changes and assess their potential impact on their accounting and reporting processes and systems.
Please read our detailed analysis here to learn more about the improved profit and loss statement structure, including some key considerations for companies to achieve the above requirements. We also highlight some of the reliefs and simplifications provided by the standard around applying the defined categories.
By Alexander Thuku,
Senior Consultant and Accounting Panel Expert, AARO
