IFRS NEWS October 2025

1. Accounting news

Investment Income in the Income Statement.

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

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

Considering a company that does not have a specific core business activity, income and expenses from the following should be classified as investment: a) investments in associates, joint ventures, and subsidiaries, b) cash and cash equivalents, and c) other assets that generate a return on an individual basis and largely independently of the entity's other resources.

In this category, we will classify income from stock dividends, interest income from bonds, rental income from investment property, depreciation of investment property, fair value gains and losses on investment property, interest income from term deposits, among others.

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

Under the equity method of accounting for an investment in an associate, income is classified as investment income.

Income and expenses arising from assets accounted for using the equity method of investment in an associate are presented in the investment category, regardless of whether the investment in these assets is a specific activity of the entity or not.