This article explains the proposed Ind AS 118 framework for classifying income and expenses in the statement of profit or loss. It discusses how the proposed Standard introduces a structured approach to operating, investing, financing, income taxes and discontinued operations categories.
‣ Main Business Activity - Explains why classification may depend on whether the entity invests in assets or provides financing to customers
‣ Opening Category - Discusses the residual nature of operating income and expenses
‣ Investing Category - Covers income and expenses from investments, cash equivalents and independent-return assets
‣ Financing Category - Explains classification of income and expenses from financing liabilities
‣ Presentation Judgement - Highlights the need for consistent judgement and documentation
