Get ready for IFRS 18

Effective date and transition

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. Entities that early adopt IFRS 18 are required to disclose that fact in the notes.

For some entities in particular, there's a need to begin the transition early to be fully prepared for mandatory application from 1 January 2027, with retrospective restatement of comparatives.

While IFRS 18 must be applied retrospectively applying IAS 8, entities are not required to disclose the quantitative information set out in IAS 8, ie entities do not have to disclose the amount of the adjustment to each financial statement line item or the adjustment to basic and diluted earnings per share in the current period.

For the comparative period, an entity must disclose a reconciliation between the restated amounts presented and the amounts previously presented for the comparative period applying IAS 1. This is also required for the comparative periods presented in interim financial statements prepared under IAS 34. Entities are permitted, but not required, to present similar reconciliations for the current period, as well as older comparative periods.

When first applying IFRS 18, an entity also has the option to change an election of how an investment in associate or joint venture is measured. If they are eligible to apply the exemption in IAS 28 ‘Investments in Associates and Joint Ventures’ (which applies for investments held by, or indirectly though, an entity that is a venture capital organisation, mutual fund, unit trust or similar entity), an entity may change its election for measuring investments from the equity method to fair value through profit or loss in accordance with IFRS 9.