IFRS 18 vs IAS 1: the differences that matter

If you know IAS 1, you already know most of IFRS 18. This guide concentrates on what is different, so you can see quickly which parts of your financial statements need work.

By Muhammad Bilal, Chartered Accountant. Reviewed by Awais Jameel, Chartered Accountant. Checked against official sources on . 2 minute read.

Short answer

IAS 1 left the layout of the income statement largely to each company. IFRS 18 keeps most of IAS 1's general requirements but adds a fixed structure: five categories, two new required subtotals, a note on management-defined performance measures, and tighter rules on grouping items. Recognition and measurement are unchanged.

At a glance

Categories
5 defined, instead of a free layout
Operating profit
Defined and required
Share of associates' profit
Always in investing
Finance income on cash
Investing, not financing
Expenses by function
Extra note by nature
Goodwill
Shown separately on the balance sheet
IFRS 18 vs IAS 1: the differences that matterCategories: 5 defined, instead of a free layout; Operating profit: Defined and required; Share of associates' profit: Always in investing; Finance income on cash: Investing, not financing; Expenses by function: Extra note by nature; Goodwill: Shown separately on the balance sheet.KEY FACTS AT A GLANCEIFRS 18 vs IAS 1: the differences that matterCategories5 defined, instead of afree layoutOperating profitDefined and requiredShare of associates' profitAlways in investingFinance income on cashInvesting, not financingExpenses by functionExtra note by natureGoodwillShown separately on thebalance sheetChecked against official sourcesTax BakersIFRS 18 vs IAS 1: the differences that matterCategories: 5 defined, instead of a free layout; Operating profit: Defined and required; Share of associates' profit: Always in investing; Finance income on cash: Investing, not financing; Expenses by function: Extra note by nature; Goodwill: Shown separately on the balance sheet.KEY FACTS AT A GLANCEIFRS 18 vs IAS 1: the differencesthat matterCategories5 defined, instead of a free layoutOperating profitDefined and requiredShare of associates' profitAlways in investingFinance income on cashInvesting, not financingExpenses by functionExtra note by natureGoodwillShown separately on the balance sheetChecked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

What are the differences at a glance?

TopicIAS 1IFRS 18
Income statement layoutMinimum line items; no required categoriesOperating, investing, financing, income taxes and discontinued operations
Operating profitOptional and undefinedRequired; everything not placed in another category
Profit before financing and income taxesNot requiredRequired for most companies
Share of profit of associates and joint venturesPosition varied; often inside or just below operating profitInvesting category
Interest income on cash and depositsUsually "finance income"Investing category
Exchange differencesOften one lineFollow the item that caused them
Adjusted or underlying profit measuresOutside the financial statementsReconciled in a note, with tax and non-controlling interest effects
Expenses presented by functionDisclose depreciation, amortisation and employee benefitsDisclose five specified expenses by nature for each function line
"Other" as a labelCommonAllowed only when no more informative label exists
Cash flow statement, indirect methodStart from profit; choices for interest and dividendsStart from operating profit; choices removed for most companies

Where did the rest of IAS 1 go?

Requirements on the basis of preparation, such as going concern, accounting policies and fair presentation, move into IAS 8, which is renamed to reflect that. Some disclosures on financial instruments move to IFRS 7. The requirements for the statement of financial position, the statement of changes in equity and other comprehensive income are largely carried forward, with one visible change: goodwill is presented as its own line.

What does this mean for a typical income statement?

Northline Telecom's IAS 1 income statement showed finance income of CU 12 million and finance costs of CU 70 million below its own operating profit of CU 230 million. Under IFRS 18:

  • The CU 12 million of interest on bank deposits moves to the investing category.
  • Rental income of CU 8 million and dividends of CU 3 million leave "other income" and move to investing.
  • A CU 3 million exchange loss on a US dollar loan leaves "other expenses" and moves to financing.
  • The CU 9 million share of an associate's profit sits in investing.

Operating profit becomes CU 222 million, and a new subtotal, profit before financing and income taxes, shows CU 254 million. See the full worked example.

Which differences take the most work?

For most companies: tagging every income and expense account to a category, deciding whether any publicly used measure is a management-defined performance measure, and restating the comparative year. The IFRS 18 income statement mapper (Excel) and the Comparatives restatement workbook (Excel) cover the first and third.

Getting ready for IFRS 18?

We help finance teams map their income statement to the new categories, restate comparatives and prepare the new disclosures.

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Questions people ask

Is IFRS 18 completely different from IAS 1?

No. Most general requirements carry over. The new requirements are concentrated in the income statement and the notes.

Does IFRS 18 define EBITDA?

No. It names a subtotal for operating profit before depreciation, amortisation and specified impairments, but it does not define EBITDA.

Is operating profit required under IFRS 18?

Yes. It is one of two new required subtotals.

What happens to IAS 1 when IFRS 18 takes effect?

It is withdrawn. Many of its requirements move unchanged into IFRS 18, and some move to IAS 8 and IFRS 7.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS 18 Presentation and Disclosure in Financial Statements
  2. Australian Accounting Standards Board: AASB 18, the Australian equivalent of IFRS 18 (full text)
  3. IFRS Foundation: IFRS 18, the new requirements (presentation)

Rules and fees change. If you are reading this long after October 4, 2026, confirm the figures with the source before you rely on them.

IFRS 18IFRS 18 explained: what changes and whenIFRS 18IFRS 18 income statement categories: operating, investing and financingIFRS 18Operating profit under IFRS 18: what is in and what is out

More in IFRS 18

TopicAll 12 guides in IFRS 18

This guide is general information. It is not tax or legal advice for your situation.