Full explanation
Overview
Since IFRS 18 came out, these ten questions keep coming up.
Let's crack them, rapid-fire — no fluff, just the real answers.
Does IFRS 18 change how you calculate profit?
Does IFRS 18 change how you calculate profit?
No — the biggest myth. IFRS 18 changes nothing about recognition or measurement; how you calculate profit is identical. It only changes where each number sits on the income statement.
What are the five categories under IFRS 18?
What are the five categories under IFRS 18?
Operating, investing, financing, income tax, and discontinued operations. Operating is the default — anything not specifically routed elsewhere lands there. Investing and financing have narrow, specific definitions.
What actually counts as an MPM ?
What actually counts as a Management-Defined Performance Measure?
An MPM must be a subtotal of income and expenses, used publicly outside the accounts, showing management's view of overall performance. A ratio like return on assets, or free cash flow, doesn't qualify.
Is "adjusted EBITDA" an MPM?
Is 'adjusted EBITDA' an MPM?
Yes — adjusted EBITDA is a classic MPM, needing a reconciliation note. But operating profit before depreciation, amortisation, and IAS thirty-six impairments is different — that specific combination is excluded from the MPM definition, even though it isn't one of IFRS eighteen's two mandatory subtotals.
Why did interest income move for some, not others?
Why did interest income move categories for some companies but not others?
Because classification depends on the entity's main business. For a bank, interest income is operating — it's the core business. For a manufacturer, that same interest income sits in investing.
Why did my joint-venture profit disappear?
Why did my share of a joint venture's profit disappear from operating profit?
It didn't disappear — it moved. Under IFRS 18, results from equity-accounted associates and joint ventures are excluded from operating profit entirely, and now sit in the investing category instead.
Do unusual or one-off costs get their own category?
Do one-off or unusual costs get their own category?
No — and this surprises people. IFRS 18 keeps volatile, unusual, one-off items inside operating profit; there's no separate bucket for them. It just requires they're clearly disaggregated and disclosed.
Does IFRS 18 only change the income statement ?
Does IFRS 18 only change the income statement?
No. It also amends the cash flow statement — the indirect method now starts from operating profit, not profit after tax. The balance sheet barely changes at all.
Is IFRS 18 mandatory yet , or can I wait?
Is IFRS 18 mandatory yet, or can I wait?
It's mandatory for periods starting on or after January 2027, applied retrospectively — so your 2026 comparatives get restated too. Early adoption is allowed, but you have to disclose it.
Does IFRS 18 apply to private companies too?
Does IFRS 18 apply to private companies too?
Yes — it applies to every entity reporting under full IFRS, public or private. The only ones exempt use a completely separate, simplified standard called IFRS for SMEs.
Ten questions, answered .
Ten questions, answered.