3.

2 The statement of comprehensive income and the statement of profit or loss (IFRS Based)

3.2.1 Profit and loss and comprehensive income

 The IASB regards all changes in net assets (other than the introduction and return of capital) and
not just more traditional realized profits, as ‘performance’ in its widest sense.
 Accordingly, IAS 1 requires a performance statement showing such changes and calls it a
statement of comprehensive income.
 Total comprehensive income is defined by IAS 1 as the change in equity during a period resulting
from transactions and other events, other than those changes resulting from transactions with
owners in their capacity as owners.
 It comprises all components of ‘profit or loss’ and of ‘other comprehensive income’. These two
terms are defined as follows:
1. profit or loss is the total of income less expenses, excluding the components of
other comprehensive income; and
2. other comprehensive income comprises items of income and expense (including
reclassification adjustments) that are not recognized in profit or loss as required or
permitted by other IFRSs. [IAS 1.7].
 The use of a variety of terminology is recognized by IAS 1 which notes the following. ‘Although
this Standard uses the terms “other comprehensive income”, “profit or loss” and “total
comprehensive income”, an entity may use other terms to describe the totals as long as the
meaning is clear.
For example, an entity may use the term “net income” to describe profit or loss.’ [IAS 1.8]. What
this means is that profit and loss is the default category – all comprehensive income is part of
profit and loss unless a provision of IFRS say it is or may be ‘other’ comprehensive income. [IAS
1.88].
 IAS 1 sets out the following items which are included in other comprehensive income:
(a) changes in revaluation surplus relating to property, plant and equipment and intangible
assets;
(b) re-measurements on defined benefit plans in accordance with IAS 19;
(c) gains and losses arising from translating the financial statements of a foreign operation;
(d) gains and losses on re-measuring available-for-sale financial assets;3
(e) the effective portion of gains and losses on hedging instruments in a cash flow hedge; and
(f) for periods beginning on or after 1 January 2018 or earlier if IFRS 9 is adopted early, for
liabilities designated as at fair value through profit and loss, fair value changes attributable to
changes in the liability’s credit risk. [IAS 1.7]

 IAS requires that all items of income and expense be presented either:
(a) in a single statement of profit or loss and other comprehensive income (with a separate
section for each in the order stated); or
(b) in two separate statements:
(i) a statement of profit or loss; and
(ii) a statement of comprehensive income beginning with profit and loss and containing
components of other comprehensive income. [IAS 1.10A].
 If the approach in (b) is followed, the statement of profit or loss must be displayed immediately
before the statement of comprehensive income. [IAS 1.10A]. In addition to this choice, IAS 1
provides that different titles may be used for these statements. [IAS 1.10].

 Many entities continue to present a separate statement of profit or loss (often titled ‘income
statement’), and this section is structured in these terms. However, the requirements are the
same whether total comprehensive income is presented in one or two statements.

 IAS 1 adopts an essentially permissive approach to the format of the statement of profit or loss
and statement of comprehensive income. It observes that, because the effects of an entity’s
various activities, transactions and other events differ in frequency, potential for gain or loss and
predictability, disclosing the components of financial performance assists users in understanding
the financial performance achieved and in making projections of future performance. [IAS 1.86].
In other words, some analysis of the make-up of net profit and other comprehensive income is
needed, but a wide variety of presentations would all be acceptable.

 Whether one or two statements are presented, IAS 1 requires certain specific items to appear
on the face of the statement(s) and then supplements this with a more general requirement
that:
1. additional line items be presented (including the disaggregation of those specifically
required) on the face of the statement(s); and
2. the descriptions used and the ordering of items be amended; when this is relevant to an
understanding of the entity’s financial performance. [IAS 1.85-86].
 The standard explains that additional line items should be included, and the descriptions used
and the ordering of items amended when this is necessary to explain the elements of financial
performance.
 Factors to be considered would include materiality and the nature and function of the items of
income and expense. An example of this is that a financial institution may amend the
descriptions to provide information that is relevant to the operations of a financial institution.
[IAS 1.86].
 When additional subtotals are presented, line items should be given that reconcile those
subtotals with the subtotals or totals required in IFRS. [IAS 1.85B].
 Such additional subtotals are presented, they should: (a) be comprised of line items made up of
amounts recognized and measured in accordance with IFRS; (b) be presented and labelled in a
manner that makes the line items that constitute the subtotal clear and understandable; (c) be
consistent from period to period (see 4.1.4 below); and (d) not be displayed with more
prominence than the subtotals and totals required in IFRS for the statement(s) presenting profit
or loss and other comprehensive income. [IAS 1.85A].

3.2.2 Information required on the face of the statement of profit or loss

As is the case for the statement of financial position, IAS 1 sets out certain items which must appear on
the face of the statement of profit or loss and other required disclosures which may be made either on
the face or in the notes.
  As a minimum, the face of the statement of profit or loss should include line items that present
the following amounts (although as noted above, the order and description of the items should
be amended as necessary):
(a) revenue;
(b) gains and losses from the de-recognition of financial assets measured at amortized cost;
(c) finance costs;
(d) share of the profit or loss of associates and joint ventures accounted for using the equity
method;
(e) any difference between fair value and the previous carrying amount at the date of
reclassification when a financial asset is reclassified to be measured at fair value;
(f) tax expense;
(g) a single amount comprising the total of:
(i) the post-tax profit or loss of discontinued operations; and
(ii) the post-tax gain or loss recognized on the measurement to fair value less costs to
sell or on the disposal of the assets or disposal group(s) constituting the discontinued
operation; [IFRS 5.33(a)(ii)]

(h) profit or loss; [IAS 1.81A, 82] and

(i) the following as allocations of profit or loss for the period: (i) profit or loss attributable to
non-controlling interests; and (ii) profit or loss attributable to owners of the parent. [IAS 1.81B].

 Items (b) and (e) above are required once an entity applies IFRS 9 (that is periods beginning on
or after 1 January 2018),
 As discussed at 3.2.3 below, an analysis of expenses is required based either on their nature or
their function. IAS 1 encourages, but does not require this to be shown on the face of the
statement of profit or loss. [IAS 1.99-100].
 The implementation guidance accompanying the standard provides an illustrative example of a
statement of profit or loss (see Example 3.4 at 3.2.3.A below).

3.2.2.A Operating profit

 The current IAS 1 has omitted the requirement in the 1997 version to disclose the results of
operating activities as a line item on the face of the statement of profit or loss. The reason given
for this in the Basis for Conclusions to the standard is that ‘Operating activities’ are not defined
in the standard, and the Board decided not to require disclosure of an undefined item. [IAS
1.BC55].
 The Basis for Conclusions to IAS 1 goes on to state that ‘The Board recognizes that an entity may
elect to disclose the results of operating activities, or a similar line item, even though this term is
not defined. In such cases, the Board notes that the entity should ensure the amount disclosed
is representative of activities that would normally be considered to be “operating”. ‘In the
Board’s view, it would be misleading and would impair the comparability of financial statements
if items of an operating nature were excluded from the results of operating activities, even if
that had been industry practice. For example, it would be inappropriate to exclude items clearly
related to operations (such as inventory write downs and restructuring and relocation expenses)
 because they occur irregularly or infrequently or are unusual in amount. Similarly, it would be
inappropriate to exclude items on the grounds that they do not involve cash flows, such as
depreciation and amortization expenses.’ [IAS 1.BC56].
 As noted at 3.2.2 above, IAS 1 requires the face of the statement of profit or loss to show the
share of the profit or loss of associates and joint ventures accounted for using the equity
method. For entities presenting a measure of operating profit, in our view it is acceptable for an
entity to determine which such investments form part of its operating activities and include
their results in that measure, with the results of non-operating investments excluded from it.
 Another acceptable alternative would be to exclude the results of all associates and joint
ventures from operating profit.

3.2.3 Classification of expenses recognized in profit or loss by nature or function

 IAS 1 states that components of financial performance may differ in terms of frequency,
potential for gain or loss and predictability, and requires that expenses should be sub-classified
to highlight this. [IAS 1.101].
 To achieve this, the standard requires the presentation of an analysis of expenses (but only
those recognized in profit or loss) using a classification based on either their nature or their
function within the entity, whichever provides information that is reliable and more relevant.
[IAS 1.99]. It is because each method of presentation has merit for different types of entities,
that the standard requires management to make this selection. [IAS 1.105].
 As noted at 3.2.2 above IAS 1 encourages, but does not require the chosen analysis to be shown
on the face of the statement of profit or loss. [IAS 1.100]. This means that entities are permitted
to disclose the classification on the face on a mixed basis, as long as the required classification is
provided in the notes. Indeed, the IASB itself produces an example of such a statement of profit
or loss in an illustrative example to IAS 7. [IAS 7.IE A].
 The standard also notes that the choice between the function of expense method and the
nature of expense method will depend on historical and industry factors and the nature of the
entity. Both methods provide an indication of those costs that might vary, directly or indirectly,
with the level of sales or production of the entity. However, because information on the nature
of expenses is useful in predicting future cash flows, additional disclosure is required when the
function of expense classification is used (see 3.2.3.B below). [IAS 1.105].

3.2.3.A Analysis of expenses by nature

 For some entities, ‘reliable and more relevant information’ may be achieved by aggregating
expenses for display in profit or loss according to their nature (for example, depreciation,
purchases of materials, transport costs, employee benefits and advertising costs), and not
reallocating them among various functions within the entity. IAS 1 observes that this method
may be simple to apply because no allocations of expenses to functional classifications are
necessary.
The standard illustrates a classification using the nature of expense method as follows: Example:

Revenue XX
Other income XX
Changes in inventories of finished goods and work in progress XX
Raw materials and consumables used XX
Employee benefits expense XX
Depreciation and amortization expense XX
Other expenses XX
Total expenses (XX)
Profit before tax XX

The implementation guidance accompanying the standard provides a further example of a statement of
profit or loss analyzing expenses by nature. Whilst very similar to the above, it is expanded to show
further captions as follows: [IAS 1.IG Part I]

Example 3.4: Illustrative statement of profit or loss with expenses classified by nature.

XYZ GROUP
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2016
(in thousands of Euros)

2016 2015
Revenue 390,000 355,000
Other income 20,667 11,300
Changes in inventories of finished goods and work in progress (115,100) (107,900)
Work performed by the entity and capitalized 16,000 15,000
Raw material and consumables used (96,000) (92,000)
Employee benefits expense (45,000) (43,000)
Depreciation and amortization expense (19,000) (17,000)
Impairment of property, plant and equipment (4,000) –
Other expenses (6,000)
(5,500)
Finance costs (15,000) (18,000)
Share of profit of associates 35,100 30,100
Profit before tax 161,667 128,000
Income tax expense (40,417) (32,000)
Profit for the year from continuing operations 121,250 96,000
Loss for the year from discontinued operations – (30,500)
Profit for the year 121,250 65,500

Profit attributable to: Owners of the parent 97,000 52,400

Non-controlling interests 24,250 13,100
121,250 65,500

Earnings per share (€) Basic and diluted 0.46 0.30

  A footnote to the illustrative examples explains that ‘share of profits of associates’ means share
of the profit attributable to the owners of the associates and hence is after tax and non-
controlling interests.
 An entity using the approach above would need to give a second statement presenting items of
other comprehensive income.
3.2.3.B Analysis of expenses by function
 For some entities, ‘reliable and more relevant information’ may be achieved by aggregating
expenses for display purposes according to their function for example, as part of cost of sales,
the costs of distribution or administrative activities. Under this method, IAS 1 requires as a
minimum, disclosure of cost of sales separately from other expenses.
 The standard observes that this method can provide more relevant information to users than
the classification of expenses by nature, but that allocating costs to functions may require
arbitrary allocations and involve considerable judgement. An example of classification using the
function of expense method given by the standard set out below.
Example 3.5: Example of classification of expenses by function [IAS 1.103]
Revenue xx
Cost of sales (xx)
Gross profit xx
Other income xx
Distribution costs (xx)
Administrative expenses (xx)
Other expenses (xx)
Profit before tax xx

 Entities classifying expenses by function are required by IAS 1 to disclose additional information
on the nature of expenses, and this must include depreciation and amortization expense and
employee benefits expense. [IAS 1.104].
 This requirement of IAS 1 strikes us as unnecessary as the disclosure of these items (broken
down into their components) is specifically required by IAS 16, IAS 19 and IAS 38 – Intangible
Assets.

3.2.4 The statement of comprehensive income 3.2.4.A

The face of the statement of comprehensive income Whether presented as a separate statement or as a
section of a combined statement (see 3.2.1 above), the face of the statement of comprehensive income
should set out the items below. The items in (b) and, separately, the items in (c) should be presented in
two groups, one including items which may subsequently be reclassified into profit or loss and another
including items which will not: [IAS 1.81A-82A]

(a) profit or loss (if two statements are presented this will be a single line item);

(b) each item of comprehensive income, classified by nature, which include:

 (i) changes in revaluation surplus relating to property, plant and equipment and
intangible assets;

(ii) re-measurements on defined benefit plans in accordance with IAS 19;

(iii) gains and losses arising from translating the financial statements of a foreign
operation;

(iv) gains and losses on re-measuring available-for-sale financial assets;

(v) the effective portion of gains and losses on hedging instruments in a cash flow
hedge;

(vi) for periods beginning on or after 1 January 2018 or earlier if IFRS 9 is adopted early,
for liabilities designated as at fair value through profit and loss, fair value changes
attributable to changes in the liability’s credit risk; [IAS 1.7] and

(vii) the aggregate amount of tax relating to components of comprehensive income,

unless the components are shown individually net of tax (see 3.2.4.C below). Tax should
be allocated between the two groups mentioned above. [IAS 1.91].

(c) share of the items of other comprehensive income of associates and joint ventures
accounted for using the equity method;

(d) reclassification adjustments, unless the components of comprehensive income are shown
after any related reclassification adjustments (see B below); [IAS 1.94] and

(e) total comprehensive income. In a separate statement of other comprehensive income IAS 1
also requires an analysis of total comprehensive income for the period between that
attributable to:

(a) non-controlling interests, and

(b) owners of the parent. [IAS 1.81B].

 In a combined statement of total comprehensive income, the equivalent analysis of profit and
loss would also be required as would earnings per share disclosures (discussed in Chapter 34 at
7). When two separate statements are presented, these would appear on the statement of
profit or loss. [IAS 33.67A].
 IAS 1 provides an illustration of both the ‘one statement’ and ‘two statement’ approach in its
implementation guidance. An illustration of a single statement of comprehensive income is
given in Example 3.6 below. An illustration of a separate statement of profit or loss is given in
Example 3.4 above and an illustrative separate statement of other comprehensive income is
given in Example 3.8 below.
Example 3.6: Presentation of comprehensive income in one statement and the classification of
expenses by function [IAS 1 Part I]

XYZ Group
Statement of profit or loss and other comprehensive income
For the year ended 31 December 2016
(in thousands of currency units)

2016 2015
Revenue 390,000 355,000
Cost of sales (245,000) (230,000)
Gross profit 145,000 125,000
Other income 20,667 11,300
Distribution costs (9,000) (8,700)
Administrative expenses (20,000) (21,000)
Other expenses (2,100) (1,200)
Finance costs (8,000) (7,500)
Share of profit of associates (1) 35,100 30,100
Profit before tax 161,667 128,000
Income tax expense ( 40,417) (32,000)
Profit for the year from continuing operations 121,250 96,000
Loss for the year from discontinued operations – (30,500)
PROFIT FOR THE YEAR 121,250 65,500
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on property revaluation 933 3,367
Re-measurements of defined benefit pension plans (667) 1,333
Share of other comprehensive income of associates (2) 400 (700)
Income tax relating to items that will not be reclassified(3) (166) (1,000)
500 3,000
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations(4) 5,334 10,667
Available-for-sale financial assets(4)(5) (24,000) 26,667
Cash flow hedges(4) (667) (4,000)
Income tax relating to items that may be reclassified(3) 4,833 (8,334)
(14,500) 25,000
Other comprehensive income for the year, net of tax (14,000) 28,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 107,250 93,500
Profit attributable to:
Owners of the parent 97,000 52,400
Non-controlling interests 24,250 13,100
121,250 65,500

Total comprehensive income attributable to:

Owners of the parent 85,800 74,800
Non-controlling interests 21,450 18,700
 107,250 93,500

Earnings per share (in currency units): Basic and diluted 0.46 0.30

Alternatively, items of other comprehensive income could be presented in the statement of profit or
loss and other comprehensive income net of tax.

Other comprehensive income for the year, after tax: 2016 2015
Items that will not be reclassified to profit or loss:
Gains on property revaluation 600 2,700
Re-measurements of defined benefit pension plans (500) 1,000
Share of other comprehensive income of associates(2) 400 (700)
500 3,000
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations 4,000 8,000
Available-for-sale financial assets (18,000) 20,000
Cash flow hedges (500) (3,000)
(14,500) 25,000
Other comprehensive income for the year, net of tax(3) (14,000) 28,000

(1) This means the share of associates’ profit attributable to owners of the associates, i.e. it is after tax
and non-controlling interests in the associates.

(2) This means the share of associates’ other comprehensive income attributable to owners of the
associates, i.e. it is after tax and non-controlling interests in the associates. In this example, the other
comprehensive income of associates consists only of items that will not be subsequently reclassified to
profit or loss. Entities whose associates’ other comprehensive income includes items that may be
subsequently reclassified to profit or loss are required to present that amount in a separate line.

(3) The income tax relating to each item of other comprehensive income is disclosed in the notes.

(4) This illustrates the aggregated presentation, with disclosure of the current year gain or loss and
reclassification adjustment presented in the notes. Alternatively, a gross presentation can be used.

(5) Once IFRS 9 is applied (at the latest, for periods beginning on or after 1 January 2018) this becomes a
reference to ‘investments in equity instruments’. The caption is also moved to the section for items that
will not be reclassified to profit or loss to reflect the different requirement of IFRS 9.
The illustrative examples in the standard all use the option, which is discussed at 3.2.4.B below, to
present components of other comprehensive income net of related reclassification adjustments. The
disclosure of those reclassification adjustments in a note is reproduced in Example 3.7 below. This note
also demonstrates a reclassification adjustment not to profit and loss but to the statement of financial
position. Whilst not addressed explicitly by the standard, evidently these items (like reclassifications to
profit or loss) need not be shown on the face of the statement.

3.2.4.B Reclassification adjustments

‘Reclassification adjustments’ are items recognized in profit or loss which were previously recognized in
other comprehensive income (commonly referred to as ‘recycling’) and IAS 1 requires their disclosure.
[IAS 1.7, 92-93, 95].

Examples include adjustments arising in relation to:

1. the disposal of a foreign operation;
2. the de-recognition of available-for-sale financial assets;5 and
3. hedged forecast transactions affecting profit or loss.

 The standard allows a choice of how reclassification adjustments are presented. They may either
be presented ‘gross’ on the face of the statement, or alternatively shown in the notes.
 In the latter case, components of comprehensive income on the face of the statement are
shown net of any related reclassification adjustments. [IAS 1.94].

IAS 1 illustrates this requirement as follows: Example3.7: Note disclosure of components of other
comprehensive income [IAS 1 IG Part 1]

XYZ Group
Disclosure of components of other comprehensive income (1) Notes –
Year ended 31 December 2016
(in thousands of currency units)

2016 2015
Other comprehensive income
Exchange differences on translating foreign operations(2) 5,334 10,667
Available-for-sale financial assets:6
Gains arising during the year 1,333 30,667
Less: reclassification adjustments for gains included in profit or loss (25,3330) (24,000) (4,000) 26,667
Cash flow hedges:
Gains (losses) arising during the year (4,667) (4,000)
Less: reclassification adjustments for gains (losses) included
in profit or loss 3,333 –
Less: adjustments for amounts transferred to initial carrying of
hedged items 667 (667) – (4,000)

Gains on property revaluation 933 3,367

Re-measurements of defined benefit pension plans (667) 1,333
Share of other comprehensive income of associates 400 (700)
Other comprehensive income (18,667) 37,334
Income tax relating to components of other comprehensive income(3) 4,667 (9,334)
Other comprehensive income for the year (14,000) 28,000

(1) When an entity chooses an aggregated presentation in the statement of comprehensive income, the
amounts for reclassification adjustments and current year gain or loss are presented in the notes.

(2) There was no disposal of a foreign operation. Therefore, there is no reclassification adjustment for
the years presented.

(3) The income tax relating to each component of other comprehensive income is disclosed in the notes.
Some IFRSs require that gains and losses recognized in other comprehensive income should not be
‘recycled’ to profit and loss, and hence will not give rise to reclassification adjustments. IAS 1 gives the
following examples:
(a) revaluation surpluses for revalued property, plant and equipment, and intangible assets; and
(b) re-measurements on defined benefit plans.

The standard observes that whilst items in (a) are not reclassified to profit or loss they may be
transferred to retained earnings as the assets concerned are used or derecognized. [IAS 1.96].

This is illustrated in Example 3.9 below. 3.2.4.C Tax on items of other comprehensive income IAS 1
requires disclosure of the amount of income tax relating to each item of other comprehensive
income, including reclassification adjustments, either on the face of the statement or in the notes.
[IAS 1.90]. This may be done by presenting the items of other comprehensive income either:

(a) net of related tax effects; or

(b) before related tax effects with one amount shown for the aggregate amount of income tax relating
to those items. If the alternative at (b) is selected, the tax should be allocated between the items that
might be reclassified subsequently to profit and loss and those that will not. [IAS 1.91].

The reference to reclassification adjustments here and in the definition of other comprehensive income
(see 3.2.1 above) seems to suggest that such adjustments are themselves ‘components’ of other
comprehensive income. That would mean that the standard requires disclosure of tax related to
reclassification adjustments. The implementation guidance, however, suggests this is not required
because the note illustrating the presentation in (b) above allocates tax only to items of comprehensive
income themselves net of related reclassification adjustments. IAS 1 provides an illustration of both
approaches in its implementation guidance. The statement of comprehensive income and related note
analyzing tax are illustrated in Example 3.8 below (the related separate statement of profit or loss is

Example 3.8: Statement of comprehensive income illustrating the presentation of comprehensive

income in two statements with note disclosure of the tax effects relating to components of other
comprehensive income [IAS 1 IG Part I]
XYZ Group
Statement of profit or loss and other comprehensive income
For the year ended 31 December 2016
(in thousands of currency units)
2016 2015
Profit for the year 121,250 65,500
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on property revaluation 933 3,367
Re-measurements of defined benefit pension plans (667) 1,333
Share of other comprehensive income of associates (1) 400 (700)
Income tax relating to items that will not be reclassified(2) (166) (1,000)
500 3,000
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations 5,334 10,667
Available-for-sale financial assets (3) (24,000) 26,667
Cash flow hedges (667) (4,000)
Income tax relating to items that may be reclassified (2) 4,833 (8,334)
(14,500) 25,000
Other comprehensive income for the year, net of tax (14,000) 28,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 107,250 93,500
Total comprehensive income attributable to:
Owners of the parent 85,800 74,800
Non-controlling interests 21,450 18,700
107,250 93,500 s

Disclosure of tax effects relating to each component of other comprehensive income Notes

2016 2015

Before tax Tax Net-of tax Before tax Tax Net-of tax

Exchange differences
on translating foreign
operations 5,334 (1,334) 4,000 10,667 (2,667) 8,000
Available-for-sale
financial assets7 (24,000) 6,000 (18,000) 26,667 (6,667) 20,000
Cash flow hedges (667) 167 (500) (4,000) 1,000 (3,000)
Gains on property
revaluation 933 (333) 600 3,367 (667) 2,700
Re-measurements of
defined benefit pension
plans (667) 167 (500) 1,333 (333) 1,000
Share of other
comprehensive income
of associates 400 – 400 (700) – (700)
Other comprehensive
income (18,667) 4,667 (14,000) 37,334 (9,334) 28,000
(1) This means the share of associates’ other comprehensive income attributable to owners of the
associates, i.e. it is after tax and non-controlling interests in the associates. In this example, the other
comprehensive income of associates consists only of items that will not be subsequently reclassified to
profit or loss. Entities whose associates’ other comprehensive income includes items that may be
subsequently reclassified to profit or loss are required to present that amount in a separate line.

(2) The income tax relating to each item of other comprehensive income is disclosed in the notes.

(3) Once IFRS 9 is applied (at the latest, for periods beginning on or after 1 January 2018) this becomes a
reference to ‘investments in equity instruments’. The caption is also moved to the section for items that
will not be reclassified to profit or loss to reflect the different requirement of IFRS 9. Disclosure of tax
effects relating to each component of other comprehensive income Notes

3.2.5 Discontinued operations

As discussed, IFRS 5 requires the presentation of a single amount on the face of the statement of profit
or loss relating to discontinued operations, with further analysis either on the face of the statement or in
the notes. 3.2.6 Material and extraordinary items 3.2.6.A Material items IAS 1 requires that when items
of income or expense (a term covering both profit and loss, and other comprehensive income) are
material, their nature and amount should be disclosed separately. [IAS 1.97]. Materiality is discussed at
4.1.5.A below. The standard goes on to suggest that circumstances that would give rise to the separate
disclosure of items of income and expense include: (a) write-downs of inventories to net realisable value
or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs;
(b) restructurings of the activities of an entity and reversals of any provisions for the costs of
restructuring;