Primary Financial Statements

The IASB met on 15 November 2023 to discuss sweep issues identified in drafting IFRS 18 Presentation and Disclosure in Financial Statements (draft Standard). The issues relate to subtotals and categories, aggregation and disaggregation, and other topics.

Sweep issues related to subtotals and categories (Agenda Paper 21A)

In previous meetings, the IASB specified the assets for which an entity is required to classify income and expenses in the investing category (specified assets). At this meeting, the IASB tentatively decided to clarify that the income and expenses from the specified assets comprise:

1. the income generated by the specified assets;
2. the income and expenses arising from the initial and subsequent measurement of those assets; and
3. the incremental expenses directly attributable to acquiring and disposing of those assets (for example, transaction costs and costs to sell).

Consequently, to maintain consistency between the investing and financing categories, the IASB tentatively decided to clarify that the income and expenses from liabilities arising from transactions involving only the raising of finance comprise:

1. the income and expenses arising from the initial and subsequent measurement of those liabilities; and
2. the incremental expenses directly attributable to issuing and disposing of those liabilities (for example, transaction costs).

The IASB also tentatively decided to add application guidance with examples of assets that generate returns individually and largely independently of an entity’s other resources, and those that do not. This application guidance replaces the application guidance the IASB, at its July 2022 meeting, tentatively decided to add on income and expenses from financial assets arising from providing financing to customers.

All of the 13 IASB members present agreed with these decisions. One member was absent.

The IASB also discussed and confirmed the drafting approaches for minor sweep issues related to subtotals and categories.

Sweep issues related to aggregation and disaggregation and other topics (Agenda Paper 21B)

The IASB tentatively decided:

1. to clarify that an entity need not assess whether the classification requirements determining a primary financial statement’s structure will result in a useful structured summary (because applying those requirements will always result in a useful structured summary).
   All of the 13 IASB members present agreed with this decision. One member was absent.
2. to clarify that an entity need not present separately a specific line item in a primary financial statement if doing so is unnecessary for the statement to provide a useful structured summary—even if other IFRS Accounting Standards contain a list of specific required line items or describe the line items as minimum requirements.
   Ten of the 13 IASB members present agreed with this decision. One member was absent.
3. to remove the proposed application guidance stating that, in general, presenting the list of items set out in the draft Standard in the operating category of the statement of profit or loss would be unlikely to reduce how effective the statement is in providing a useful structured summary.
   Eleven of the 13 IASB members present agreed with this decision. One member was absent.
4. to make consequential revisions to the example in the application guidance in the draft Standard on how to aggregate and disaggregate operating expenses.
   Twelve of the 13 IASB members present agreed with this decision. One member was absent.

The IASB also discussed and confirmed the drafting approaches for minor sweep issues including management-defined performance measures, aggregation and disaggregation.