IFRS NEWS – CH.19 (April 2026)
The effective date of IFRS 18 in January 2027 marks one of the most significant changes in financial statement presentation in recent years. This new standard redefines how entities classify their income and expenses, introducing five clear categories in the Statement of Profit or Loss: operating, investing, financing, income tax, and discontinued operations. Understanding from now on how the operating category functions, its logic as an exception category, and how it impacts the classification of provisions is not just a technical advantage; it's necessary preparation for the year-end 2026 close.
Click here to view Ch. 19 Niff News
Accounting news
Operation Category
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, profit tax, and discontinued operations.
For an entity with a core business activity, income and expenses from assets that an entity uses in combination to produce goods or services are classified in the operating category; for example, depreciation of Property, Plant, and Equipment, and interest from trade receivables.
The operation category is an exception category, therefore, income and expenses that are not classified in the investment and financing categories are also classified.
IFRS 18 becomes effective on January 1, 2027, and requires a reconciliation for each item in the 2026 income statement in accordance with IAS 1 and IFRS 18.
For the cash flow statement, the operating activities category includes the activities that constitute the entity's principal revenue-producing activities as well as other activities that cannot be characterized as investing or financing activities; for example, the collection of revenue from sales of goods and services and payments to suppliers.
Accounting inquiries
What category are the effects of changes in the estimate of expenditure to settle a provision classified under?
The effect of these changes is classified in the income statement operation category.
Provisions have changes for 3 reasons: 1) increase in the updated amount of a provision due to the passage of time, 2) effect of the change in the discount rate, and 3) effect of changes in the estimate of the expense to settle the provision.
The first two changes are classified in the financing category, and the third change is classified in the operating category because it is not an interest expense nor an expense generated by interest rate fluctuations.
Spanish 
English