Skip to content (Press enter)
Show Sections

Current stage

The International Accounting Standards Board (IASB) is redeliberating proposals in the Exposure Draft General Presentation and Disclosures. The Exposure Draft, published in December 2019, proposes to improve how information is communicated in the financial statements, with a focus on information in the statement of profit or loss. The IASB discussed feedback on the Exposure Draft in December 2020 and January 2021. 

IASB® Update September 2022

The IASB met on 20 and 21 September 2022 to redeliberate the proposals in its Exposure Draft General Presentation and Disclosures relating to:

  • unusual income and expenses (Agenda Paper 21A);
  • entities with specified main business activities—associates and joint ventures (Agenda Paper 21B);
  • investments in subsidiaries, associates and joint ventures (Agenda Paper 21C);
  • classification of incremental expenses (Agenda Paper 21D);
  • specified subtotals (Agenda Paper 21E); and
  • presentation of operating expenses (Agenda Paper 21F).

Unusual income and expenses (Agenda Paper 21A)

The IASB tentatively decided that it will not proceed with any specific requirements for unusual income and expenses as part of this project. All 11 IASB members agreed with this decision.

Entities with specified main business activities—Associates and joint ventures (Agenda Paper 21B)

The IASB tentatively decided to require an entity with specified main business activities to classify in the investing category income and expenses from associates and joint ventures accounted for using the equity method. Nine of 11 IASB members agreed with this decision.

Investments in subsidiaries, associates and joint ventures (Agenda Paper 21C)

The IASB tentatively decided:

  1. to clarify that income and expenses from associates and joint ventures not accounted for using the equity method includes income and expenses from associates and joint ventures accounted for: 
    1. at cost (paragraph 10(a) of IAS 27 Separate Financial Statements);
    2. in accordance with IFRS 9 Financial Instruments (paragraph 10(b) of IAS 27); and  
    3. at fair value through profit or loss in accordance with IFRS 9 (paragraph 18 of IAS 28 Investments in Associates and Joint Ventures).
      All 11 IASB members agreed with this decision.
  2. to require income and expenses from investments in subsidiaries not accounted for using the equity method to be classified:
    1. in the investing category if investing in subsidiaries is not a main business activity; and
    2. in the operating category if investing in subsidiaries is a main business activity.
      All 11 IASB members agreed with this decision.
  3. to clarify that income and expenses from subsidiaries not accounted for using the equity method includes income and expenses from all subsidiaries that are accounted for: 
    1. at cost (paragraph 10(a) of IAS 27);
    2. in accordance with IFRS 9 (paragraph 10(b) of IAS 27); and
    3. at fair value through profit or loss in accordance with IFRS 9 (paragraph 31 of IFRS 10 Consolidated Financial Statements).
      All 11 IASB members agreed with this decision.
  4. to require that an entity classifies income and expenses from subsidiaries accounted for using the equity method in the investing category. All 11 IASB members agreed with this decision.
  5. to clarify that how an entity categorises subsidiaries, associates and joint ventures to assess whether investing in subsidiaries, associates and joint ventures is a main business activity should be consistent with how the entity categorises investments to determine the measurement basis (paragraph 10 of IAS 27).
    All 11 IASB members agreed with this decision.

Classification of incremental expenses (Agenda Paper 21D)

The IASB tentatively decided to withdraw the proposed requirement in the Exposure Draft for an entity to classify incremental expenses in the investing category. All 11 IASB members agreed with this decision.

The IASB asked the staff as a drafting consideration to explain the types of income and expenses classified in the investing category.

Specified subtotals (Agenda Paper 21E)

The IASB tentatively decided:

  1. to confirm the proposal that the specified subtotals listed in paragraph 104 of the Exposure Draft are not management performance measures. All 11 IASB members agreed with this decision.
  2. to add ‘operating profit or loss and income and expenses from investments accounted for using the equity method’ to the list of specified subtotals in paragraph 104 of the Exposure Draft. All 11 IASB members agreed with this decision.
  3. to confirm the examples of subtotals similar to gross profit listed in paragraph B78 of the Exposure Draft. All 11 IASB members agreed with this decision.
  4. to specify in the application guidance that if a management performance measure is reconciled to a specified subtotal that is not presented in the statement of profit or loss, an entity is required to reconcile that specified subtotal to a subtotal presented in the statement(s) of financial performance. An entity would not be required to disclose any other information relating to the specified subtotal.  

All 11 IASB members agreed with this decision.

The IASB also asked the staff to explore a general reconciliation requirement for subtotals disclosed in the notes and not presented in the statement(s) of financial performance.

Presentation of operating expenses (Agenda Paper 21F)

The IASB tentatively decided:

  1. to expand the explanation in the description of the function of expense method to clarify how the function of expense method involves allocating and aggregating operating expenses according to the activity to which the consumed economic resource relates.
  2. to provide application guidance to clarify the role of primary financial statements and the aggregation and disaggregation principles in applying the function of expense method.
  3. to require an entity to include in cost of sales the carrying amount of inventories recognised as an expense during the period when presenting cost of sales.
  4. to require an entity that presents functional line items to disclose a narrative description of what types of expenses (based on their nature) are included in each functional line item.

All 11 IASB members agreed with this decision.

The IASB also tentatively decided:

  1. to confirm the proposals to: 
    1. require operating expenses to be presented in the statement of profit or loss using a classification based either on their nature or function; and
    2. include application guidance on deciding which method of presenting operating expenses provides the most useful information, including the factors set out in paragraph B45 of the Exposure Draft.
  2. to withdraw the proposed prohibition on a mixed presentation of operating expenses, and: 
    1. require an entity, when considering which method to use, to consider the role of primary financial statements; and
    2. provide examples of when a mixed presentation might provide the most useful information.
  3. to provide application guidance to clarify:
    1. the requirement for consistent presentation of operating expenses from one reporting period to the next; and
    2. how to label nature line items when a mixed presentation is used.

All 11 IASB members agreed with this decision subject to some drafting considerations relating to the application guidance.

Next milestone

IFRS Accounting Standard