ICAI had issued an exposure draft of Ind AS 118 for public comments in January 2025.
The Standard requires entities to classify income and expenses into five categories: operating, investing, financing, income taxes and discontinued operations. For instance, income and expenses from assets that generate returns independently such as debt or equity investment will be classified under investing category while, income and expenses on liabilities such as bank loans and bonds will be classified under financing category, ICAI has said.
This, the Institute says, would enable investors to analyse returns from stand-alone investments separately from a company’s operations while the financing category would allow them to analyse companies’ performance before the effects of its financing.
“While it does not alter the way financial performance is measured, it introduces a more structured and consistent approach to how that performance is presented and disclosed,” Nanda said.
The proposed standards also present two additional subtotals in the profit or loss section: ‘operating profit or loss’ and ‘profit or loss before financing and income taxes’
Nanda said that this would not affect how companies measure their financial performance and the overall profit figure. “These standards will greatly benefit users of financial statements by enabling more meaningful comparisons and deeper insights into a company’s operations,” the ICAI President added.
 "Institute of Chartered Accountants of India, ICAI")
