{"id":786860,"date":"2025-11-27T14:43:45","date_gmt":"2025-11-27T12:43:45","guid":{"rendered":""},"modified":"2025-11-28T13:07:20","modified_gmt":"2025-11-28T11:07:20","slug":"novyj-standart-msfz-18-podannya-ta-rozkryttya-informatsiyi-u-finansovij-zvitnosti-chomu-pro-nogo-pochaly-govoryty-vsi","status":"publish","type":"post","link":"https:\/\/new.eba.com.ua\/en\/novyj-standart-msfz-18-podannya-ta-rozkryttya-informatsiyi-u-finansovij-zvitnosti-chomu-pro-nogo-pochaly-govoryty-vsi\/","title":{"rendered":"The New IFRS 18 \u201cPresentation and Disclosure in Financial Statements\u201d: Why Everyone Is Talking About It"},"content":{"rendered":"\t
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In 2024, the IASB published a new standard \u2014 IFRS 18 \u201cPresentation and Disclosure in Financial Statements.\u201d It becomes effective on 1 January 2027, is applied retrospectively, and replaces IAS 1 while simultaneously amending IAS 8.<\/p>\n

The main idea behind IFRS 18 is to ensure that financial statements of different companies \u201cspeak the same language.\u201d For years, users have complained about the lack of consistency: subtotals differed significantly, \u201cother\u201d line items were excessively large, and popular management metrics existed in parallel with official IFRS metrics.<\/p>\n

The new standard primarily aims to bring order to the statement of profit or loss, as it is often the main reference point for investors and lenders.<\/p>\n

Changes in IAS 8<\/strong><\/p>\n

The introduction of IFRS 18 has led to updates in IAS 8, which now effectively becomes the \u201cconstitution\u201d for preparing financial statements. The standard receives a new title \u2014 \u201cBasis for the Preparation of Financial Statements\u201d \u2014 and provides a clearer description of how accounting policies are developed.<\/p>\n

Some of the disclosure requirements for accounting policies that were previously included in IAS 1 have been transferred to IAS 8. The distinction between accounting policies and accounting estimates has also been clarified \u2014 an important change for determining when a retrospective restatement is required and when prospective amendments are sufficient.<\/p>\n

A New Logic for the Statement of Profit or Loss<\/strong><\/p>\n

The core of IFRS 18 is the revised structure of the statement of profit or loss. The standard introduces five categories of income and expenses: operating, investing, financing, income taxes, and discontinued operations. The operating category becomes the default category \u2014 everything that is not allocated to another category falls here.<\/p>\n

The investing category includes income and expenses related to assets that generate returns individually and largely independently of other resources, such as investments in associates. The financing category captures the cost of obtaining financing and other results connected to liabilities.<\/p>\n

A key concept is the entity\u2019s \u201cmain business activity.\u201d For an investment entity, if investment income represents its primary operating activity, the standard allows it to be classified within the operating category. The assessment of the main business activity is performed at the level of each reporting entity: a subsidiary may have a different profile than the group. Any change in this assessment is applied prospectively, without reclassification of prior periods.<\/p>\n

IFRS 18 also specifies mandatory subtotals, including operating profit, profit before financing and income taxes, and profit from continuing operations. This improves the comparability of financial reporting across companies.<\/p>\n

Operating Expenses and the Approach to \u201cOther\u201d Line Items<\/strong><\/p>\n

The new standard places significant emphasis on how an entity presents its operating expenses. A company may use either a nature-based analysis (materials, payroll, depreciation) or a function-based analysis (cost of sales, administrative expenses, selling expenses). A mixed presentation is also allowed if it better reflects the business model. When expenses are presented by function, the standard requires certain nature-based disclosures \u2014 at least for key components.<\/p>\n

IFRS 18 aims to avoid extremes \u2014 both excessive detail and excessive aggregation. Entities should aggregate items with similar characteristics and disaggregate those that differ materially or are individually significant. This requires balanced professional judgment: does the chosen structure help users understand what the numbers actually represent?<\/p>\n

The use of the label \u201cother\u201d is particularly sensitive. The standard expects this term to be used only when a more informative description is genuinely not possible. If the \u201cother\u201d category is significant in amount, the company must either confirm that it contains no material components or disclose the nature and size of the largest item within that group.<\/p>\n

Management-Defined Performance Measures (MDPM)<\/strong><\/p>\n

A separate section of IFRS 18 is dedicated to Management-Defined Performance Measures (MDPM). These are subtotals that a company uses in its public communications (investor reports, presentations, press releases) but that are not explicitly defined by IFRS \u2014 for example, adjusted EBITDA or profit excluding one-off expenses.<\/p>\n

The standard does not prohibit such measures, but it requires transparency. If an entity uses MDPM, it must:<\/p>\n