Financial Reporting and Assurance
IFRS 18: Presentation and Disclosure in Financial Statements
October 08, 2025
- On April 2024, the International Accounting Standards Board (IASB) introduced a new standard, IFRS 18 (Presentation and Disclosure in Financial Statements), a substitute for IAS 1: Presentation of Financial Statements.
- Effective date: January 1, 2027. Early adoption of the standard is allowed provided that disclosure is made in the notes to accounts.
- In India, the Institute of Chartered Accountants of India has formative IND AS 118: Presentation and Disclosure in Financial Statements based on IFRS 18.
What is the objective of IFSR 18?
The objective of IFRS 18 (Presentation and Disclosure in Financial Statements) is to improve the comparability, transparency, and understandability of financial statements. IFRS 18 provides a defined structure and subtotals for the profit or loss statement.
Entities are required to classify income and expenses into five categories: -
- Operating category -Income and expense from core business activities.
- Investing category -Income and expense related investment in associates, joint ventures, unconsolidated subsidiaries, cash and cash equivalents and investment in other assets
- Financing category -Income and expense related to raising fund for the entity’s core business activities.
- Income taxes category -Income tax expense or income (current & deferred) in accordance with IAS 12.
- Discontinued operations category -Operations that have been discontinued or classified as held for sale under IFRS 5.
This structured approach enhances the credibility and confidence of investors and also improves the clarity and relevance of financial information.
IFRS 18 Key Changes & Requirements
| Areas | What is the changes and new requirements |
| New subtotals in the profit and loss account | Entities should provide 2 newly defined subtotals
|
| Classification of Income & Expenses | Entities should Classify income and expenses into operating, investing, financing, income taxes, and discontinued operations |
| Management-Defined Performance Measures (MDPM) | Entities must provide the mandatory disclosures regarding management-defined performance measures (MPM) |
| Comparative Information & Opening Balances | Entities also apply IFRS 18 to the comparative information. |
| Other Disclosures | Enhanced IFRS 18 disclosure requirements around key judgments, estimates, accounting policies, and the basis of preparation. |
How MBG Can Help?
- Gap Analysis and Readiness Assessment- Reviewing existing financial statements, and preparing or reviewing the required new disclosures or notes
- Providing newly draft formats, disclosures & reporting.
- Identifying how the income statement, subtotals, categories (operating / investing / financing)
