“IFRS 18” – Presentation and Disclosure in Financial Statements

IFRS 18 — Table of Contents

CHAPTER 1 — INTRODUCTION AND CONTEXT

Learning Goals

1. What were the three critical problems with IAS 1 that led to the development of IFRS 18?

2. Which standards does IFRS 18 replace or amend, and what are the key consequential amendments?

3. What is the scope and what are the ripple effects on other standards?

4. What are the major terminology changes between IAS 1 and IFRS 18?

5. When is IFRS 18 effective and what are the key transition requirements?

CHAPTER 2 — THE FIVE-CATEGORY INCOME STATEMENT STRUCTURE

Learning Goals

1. How does the five-category structure fundamentally change income-statement presentation compared to IAS 1?

2. What makes the operating category different from the other categories, and why is it defined as the “default” category?

3. How do you apply the “individually and largely independently” test to determine investing-category classification?

4. What is the “solely raising finance” principle, and why do most lease liabilities under IFRS 16 fail this test?

5. How are the two new mandatory subtotals calculated, and what insights do they provide to financial-statement users?

CHAPTER 3 — SPECIAL RULES FOR ENTITIES WITH SPECIFIED MAIN BUSINESS ACTIVITIES

Learning Goals

1. Why do certain entities need special classification rules, and what problem would occur without them?

2. What evidence and analysis determine whether “investing in assets” qualifies as a specified main business activity?

3. How do classification rules change for banks and other entities with “providing financing to customers” as a main business activity?

4. How should companies assess whether they have specified main business activities, and what happens when this assessment changes?

5. How do these special rules apply in practice for REITs, banks, and private-equity firms?

CHAPTER 4 — MANAGEMENT-DEFINED PERFORMANCE MEASURES (MPMs)

Learning Goals

1. What is a management-defined performance measure (MPM), and why did the IASB introduce disclosure requirements for these measures?

2. What are the three criteria that must all be met for a subtotal to qualify as an MPM?

3. What specific disclosures must companies provide for each MPM, and why is detailed reconciliation required?

4. Which commonly used subtotals are specifically excluded from the MPM definition, and why?

5. How should companies systematically identify all their MPMs and implement the disclosure requirements?

CHAPTER 5 — OPERATING EXPENSES, AGGREGATION AND ENHANCED PRESENTATION

Learning Goals

1. What are the two methods for presenting operating expenses, and how should companies choose which method provides the most useful structured summary?

2. What are the core principles of aggregation and disaggregation, and how do similar versus dissimilar characteristics guide these decisions?

3. When presenting operating expenses by function, what additional disclosures are required, and why?

4. What restrictions does IFRS 18 place on labeling line items, particularly regarding the use of “Other” categories?

5. How do the roles of primary financial statements differ from the roles of notes in presenting information to users?

CHAPTER 6 — TRANSITION, IMPLEMENTATION AND PRACTICAL ROADMAP

Learning Goals

1. What does retrospective application of IFRS 18 require, and what relief does the standard provide from normal IAS 8 requirements?

2. What specific reconciliation must companies provide in the year of first adoption, and what must this reconciliation show?

3. How do interim financial statements in the first year of adoption differ from normal IAS 34 requirements?

4. What are the critical steps companies should take to prepare for IFRS 18 implementation before the January 2027 effective date?

5. What are the most common implementation challenges companies face, and what strategies help address them?

BONUS LECTURE: IAS 1 REPORTING — WHAT REMAINS UNCHANGED IN IFRS 18

Learning Goals

1. What IAS 1 is and why it has been the standard for financial reporting for decades 

2. The foundational requirements that remain completely unchanged in IFRS 18 

3. How IFRS 18 builds upon (rather than replaces) these fundamental principles 

4. The core accounting concepts that apply to all entities regardless of IFRS 18 adoption