Reporting lines in Other Operating Income

Reporting lines in Other Operating Income – What has to be included in profit or loss and what should be included in other comprehensive income?

The answer is defined practical in IFRS (IAS 1 Presentation of Financial Statements, in 7 Definitions):

Other comprehensive income (OCI) comprises items of income and expense (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by other IFRSs.

So each reporting line or reporting event not mentioned below should in principal be included in profit or loss1. Reporting lines in Other Operating Income

In the presentation of other comprehensive income there are two classes of other comprehensive income: Reporting lines in Other Operating Income

  1. Items that will not be reclassified to profit or loss, and Reporting lines in Other Operating Income
  2. Items that will or may be reclassified to profit or loss. Reporting lines in Other Operating Income

The components of other comprehensive income include: Reporting lines in Other Operating Income

IFRS event

IFRS Standards / Reporting components

Changes in revaluation surplus

Class: items not reclassified to profit or loss

IAS 16 Property, Plant and Equipment

IAS 38 Intangible Assets

An increase in value in OCI and allocation to the revaluation reserve component in equity [IAS 16.39, IAS 38.85]

A decrease also in OCI if there is a credit balance in the revaluation reserve component in equity, otherwise the decrease is recorded in profit or loss [IAS 16.40, IAS 38.86]

Remeasurement of defined benefit plans

Class: items not reclassified to profit or loss

IAS 19 Employee Benefits

Actuarial gains and losses, those are gains and losses that result from changes in actuarial assumptions,  and experience adjustments (such as differences in employee turnover, early retirement, discount rate assumptions and actuals).  [IAS 19 128 and IAS 19 129]

Return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset) [IAS 19 130]

Any change in the effect of the asset ceiling [IAS 19 64], excluding amounts included in net interest on the net defined benefit liability (asset). [IAS 19.57 (d)]

Gains and losses arising from translating the financial statements of a foreign operation

Class: items will or may be reclassified to profit or loss

IAS 21 The Effects of Changes in Foreign Exchange Rates

Non-monetary items IAS 21.30

Foreign currency revaluation property, plant and equipment IAS 21.31

Revaluation foreign operation IAS 21.32

Monetary item part of foreign operation IAS 21.33

Gains and losses from investments in equity instruments or financial assets at fair value through other comprehensive income

Class: See next column equity instruments and financial assets

As per 5.7.5 fair value OCI option of equity instruments of IFRS 9 Financial Instruments.  The net cumulative fair value gains and losses recognised in other comprehensive income are never subsequently reclassified (recycled) from equity to profit or loss – even on disposal of the investment – meaning there is no need to review such investments for possible impairment.

As per 4.1.2A classification of financial assets of IFRS 9 Financial Instruments. Upon derecognition, the net cumulative fair value gains or losses recognised in other comprehensive income are recognised in profit or loss (referred to as ‘reclassified (recycled) to profit or loss’). This is because at derecognition the changes in fair value have become a ‘real’ profit or loss (i.e. realised result).

Gains and losses on hedging instruments

Class: items will or may be reclassified to profit or loss

As per 5.7.5 of IFRS 9 Financial Instruments (see Chapter 6 of IFRS 9 Financial Instruments)

The effective portion of gains and losses on hedging instruments in a cash flow hedge

The gains and losses on hedging instruments that hedge investments in equity instruments measured at fair value through other comprehensive income

Change in the liability’s credit risk in the change in fair value

Class: items not reclassified to profit or loss

As per 5.7.7 of IFRS 9 Financial Instruments

Particular liabilities designated as at fair value through profit or loss

Changes in the value of the time value of options

Class: items will or may be reclassified to profit or loss

Chapter 6 of IFRS 9 Financial Instruments

In separating the intrinsic value and time value of an option contract and designating as the hedging instrument only the changes in the intrinsic value

Changes in the value of the forward elements of forward contracts

Class: items will or may be reclassified to profit or loss

Chapter 6 of IFRS 9 Financial Instruments

In separating the forward element and spot element of a forward contract and designating as the hedging instrument only the changes in the spot element, and changes in the value of the foreign currency basis spread of a financial instrument when excluding it from the designation of that financial instrument as the hedging instrument

Insurance finance income and expenses

from insurance contracts issued within the scope of IFRS 17 Insurance Contracts excluded from profit or loss when total insurance finance income or expenses is disaggregated to include in profit or loss an amount determined by a systematic allocation applying paragraph 88(b) of IFRS 17, or by an amount that eliminates accounting mismatches with the finance income or expenses arising on the underlying items, applying paragraph 89(b) of IFRS 17

Finance income and expenses

from reinsurance contracts held excluded from profit or loss when total reinsurance finance income or expenses is disaggregated to include in profit or loss an amount determined by a systematic allocation applying paragraph 88(b) of IFRS 17

Other items that are recorded through other comprehensive income not based on the definition of other comprehensive income (see above) are:

  • Inclusion of shares in the other comprehensive income of equity accounted investments in associates and joint ventures (classification not to be reclassified or will or may be reclassified based on classification in associate or joint venture), Reporting lines in Other Operating Income
  • Corporate income tax allocated to items in other comprehensive income, split into items that will not be reclassified and items that will or may be reclassified. Reporting lines in Other Operating Income

Examples are included in the PDF listed below: Reporting lines in Other Operating Income

See also: The IFRS Foundation

Reporting lines in Other Operating Income