IFRS NEWS September 2025

1. Accounting News

Income Statement Operation Category

According to IFRS 18, an entity shall classify income and expenses in the statement of financial position into one of five categories: operating, investing, financing, income tax, and discontinued operations.

To designate the category, the entity must assess whether it has a principal business activity specified in asset investment or customer financing. These activities have different income and expense classifications.

Considering a company that does not have a specified main business activity, income and expenses from assets that an entity uses in combination to produce goods or services should be classified under the operating category. This includes depreciation of property, plant, and equipment, amortization of intangibles, depreciation of right-of-use assets, interest income from trade receivables, interest income from contract assets, interest income from service concession assets—IFRIC 12, and impairment losses on PPE. It also includes income and expenses not classified under investing, financing, income tax, or discontinued operations, such as maintenance expenses for investment property, property taxes on investment property, government grant income, and interest on tax debts.

IFRS 18 is effective from January 1, 2027, and requires a reconciliation for each line item in the 2026 income statement in accordance with IAS 1 and IFRS 18.

We recommend that Accountants develop a work plan to carry out modifications to the chart of accounts, processes, and systems.  

B. Accounting Inquiries

In what category are drawback revenues classified?

Drawback revenue is classified under the operations category.

The drawback is a government grant and is recognized in accordance with IAS 20.

Government grant revenue is classified in the operating category, as it does not fall into the investing or financing categories.