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Disclosure initiative — Primary Financial Statements – International Accounting Standards Board

Date recorded:

At its meeting on October 24, 2018, the International Accounting Standards Board (the Board) met to discuss the descriptions of three subtotals that the Board is proposing for the statement(s) of financial performance.

The Board tentatively decided that:

  1. one of the three proposed subtotals should be described as "operating profit or loss";
  2. the subtotal previously described as "business profit from consolidated entities" should be described as "operating profit or loss";
  3. the subtotal previously described as ‘profit before income/expenses from investments, finance income/expenses and income tax’ should be described as "operating profit or loss and share of profit or loss of integral associates and joint ventures";
  4. the subtotal previously described as "profit before finance income/expenses and income tax" should be described as "profit or loss before financing and income tax".

The Board noted that the description of any subtotals in the statement(s) of financial performance should faithfully represent what that subtotal represents. Consequently, the Board tentatively decided to clarify, possibly through the use of an example in a revised Standard, that:

  1. the label "earnings before interest and taxes" (EBIT) would not be a faithful representation of the subtotal referred to in 4; and
  2. any management performance measure labelled as "earnings before interest and taxes" should faithfully represent what is included in that management performance measure.

The Board will continue discussing topics within the scope of the project at future Board meetings.

Review the IASB Update and podcast on the Board's Web site.

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