Required inclusion in the financial statements
The requirement to include revenue and expenditure in operating, investing or financing activities is a new development when compared to the requirements of IAS 1. Below that though the reporting entity has a wide range of flexibility in terms of the classifications it uses in the breakdown of items included in the profit or loss account. It is up to the reporting entity to use its judgment to decide what is most appropriate in the context of their own particular environment. That said there are some items which must be specifically disclosed in the financial statements. These are covered in paragraphs 75 to 77 of IFRS 18. They are as follows:
Operating expenses, using either the functional or nature of expenses approach. Paragraph 82 further states that if the function of expenses approach is used then a cost of sales figure must also be shown and there should be a qualitative explanation of the nature of the items involved. The share of the profit or loss of associates and joint ventures accounted for using the equity method. Income tax expense or income. A single amount for the total of discontinued operations (see IFRS 5). There are then some disclosures required which cross-refer to specific other IFRS Standards, specifically IFRS 9 and IFRS 17. Whilst IFRS 17 deals specifically with the fairly niche area of insurance contracts, IFRS 9 which deals with financial instruments might have more general application.
IFRS 18 | REQUIRED INCLUSION IN THE FINANCIAL STATEMENTS
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