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18 June 2025

NZ IFRS 18 on the 18th
Presentation and Disclosure in Financial Statements

This month’s focus – new categories and subtotals in the statement of profit or loss (part 2 of 2)

In the third edition of our NZ IFRS 18 on the 18th alert series, we continue looking into the new requirements relating to categories and subtotals in the statement of profit or loss. We look at the specific classification requirements in NZ IFRS 18 applying to the following common types of income and expenses.

Recent educational material on categories and subtotals in the statement of profit or loss

The May 2025 edition of the NZ IFRS 18 alert series sets out an overview of the new categories and subtotals and what is meant by a ‘specified main business activity’. In addition, our one-page guidance document illustrates these new requirements for entities that do not have a specified main business activity (that is, they do not invest in assets or provide financing to customers).

Note Entities that invest in assets or provide financing to customers as a main business activity have specific classification requirements. Refer to paragraphs 55–58 and 65–66 of NZ IFRS 18, or watch our deep dive session below, to hear about these requirements.

Specific classification requirements in the statement of profit or loss

The following classification requirements are applicable to all entities, irrespective of main business activity.

Income and expenses on derecognition and changes in classification of assets and liabilities

Entities may incur income and expenses due to derecognising assets or liabilities, or due to changing the classification and measurement of assets. NZ IFRS 18 sets out specific classification requirements relating to these types of income and expenses as follows.

Note – An entity must classify gains and losses on an undesignated component of a designated hedging instrument in the same category as gains and losses on the designated component. An entity must also classify ineffective portions of a gain or loss in the same category as the effective portions (see paragraph B71).

For hedging instruments and non-hedges used to manage identified risks, there is a practical expedient within NZ IFRS 18 to classify the gains and losses on these instruments into the operating category if this will result in the grossing up of gains or losses (see paragraph B72).

For example, where a derivative is used to manage net FX risk on revenue (operating category) and interest expenses (financing category) then classifying the gain or loss on the derivative in each category would require a larger gross gain or loss to be presented separately in both the operating and financing category. In this instance, the net gain or loss should simply be classified in the operating category.

How will these new requirements affect you?

While NZ IFRS 18 is not mandatory until periods beginning on or after 1 January 2027, we encourage you to start thinking about the impact of NZ IFRS 18 on your financial reporting now. Early preparation will make your year-end financial reporting processes easier if you know how your transactions will be presented within your financial statements.

We have listed some key considerations for you when thinking about how the new requirements for categories and subtotals will impact on your financial reporting. 

Our website is your one-stop shop for all things NZ IFRS 18-related

Our NZ IFRS 18 webpage includes:

  • The full NZ IFRS 18 in PDF – and a link to the XRB Standards Navigator for the html web version

  • International Accounting Standards Board (IASB) illustrative examples and basis for conclusions

  • 2027 versions of other NZ IFRSs that are substantively amended by NZ IFRS 18

  • Other guidance and useful information

  • Past editions of the NZ IFRS 18 on the 18th alerts

On our webpage, you can also find a link to the IASB’s IFRS 18 supporting material. This material includes webinar recordings, project summaries and an effects analysis. The IASB has also developed a table of concordance, showing how the contents of IAS 1 and IFRS 18 (or other standards, as applicable) correspond. As we create more content, we will publish it on our NZ IFRS 18 webpage.

NZ IFRS 18 news

Upcoming new amending standard

  • RDR Concessions – NZ IFRS 18 Presentation and Disclosure in Financial Statements 

    • This new amending standard provides disclosure concessions for Tier 2 entities for certain new requirements introduced by NZ IFRS 18.

    • The NZASB approved the final amending standard, with no changes from the exposure draft, on 11 June 2025. We expect to issue the amending standard later this month. 

Upcoming events

  • 7 August 2025 – NZ IFRS 18 deep dive on the enhanced requirements for grouping of information in the financial statements – register here.

  • 7 October 2025 – NZ IFRS 18 deep dive on management-defined performance measures – register here.

Open consultation

In case you missed them, you can find our previous alerts in the NZ IFRS 18 on the 18th series here.

What more do you want to know?

We are issuing these alerts to help you get ready for NZ IFRS 18. The diagram below sets out the focus for each month’s alert throughout 2025.

We are keen to hear from you on any areas of the standard where you would like more information or guidance. Please contact us at accounting@xrb.govt.nz

This publication has been prepared by staff of External Reporting Board (XRB) for information or illustration purposes. It does not form part of the standards or authoritative publications issued by the XRB. It should not be used as a substitute for reading the relevant standard requirements of NZ IFRS 18, nor is it a substitute for professional accounting advice. The content of this newsletter is for general information only and does not constitute professional advice. ​The XRB expressly disclaims all liability for any loss or damages arising from reliance upon any information in this newsletter. ​