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15.6 Income statement and statement of comprehensive income
Publication date: 27 Feb 2022
us IFRS & US GAAP guide
The most significant difference between the frameworks is that under IFRS an entity can present expenses based on their nature or their function.
US GAAP | IFRS |
The income statement may be presented in either (1) a single-step format, whereby all expenses are classified by function and then deducted from total income to arrive at income before tax, or (2) a multiple-step format separating operating and nonoperating activities before presenting income before tax.
| While certain minimum line items are required, no prescribed statement of comprehensive income format exists.
Entities that disclose an operating result should include all items of an operating nature, including those that occur irregularly or infrequently or are unusual in amount, within that caption.
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SEC regulations require all registrants to categorize expenses in the income statement by their function. However, depreciation expense may be presented as a separate income statement line item. In such instances, the caption “cost of sales” should be accompanied by the phrase “exclusive of depreciation shown below" and presentation of a gross margin subtotal is precluded.
All items included in other comprehensive income are subject to recycling.
| Expenses may be presented either by function or by nature, whichever provides information that is reliable and more relevant depending on historical and industry factors and the nature of the entity. Additional disclosure of expenses by nature, including depreciation and amortization expense and employee benefit expense, is required in the notes to the financial statements if functional presentation is used on the face of the income statement.
Entities should not mix functional and nature classifications of expenses by excluding certain expenses from the functional classifications to which they relate.
Entities are required to present items included in other comprehensive income that may be reclassified into profit or loss in future periods separately from those that will not be reclassified.
The share of other comprehensive income of associates and joint ventures accounted for using the equity method must be grouped into those that will and will not be reclassified to profit or loss.
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