The operating category as the default

Learning objectives

• Explain why the operating category is a residual category.L1
• Calculate the total of the operating category from items classified by the case.L1, L2, L3

Normative references

• IFRS 18 §52The operating category includes all income and expenses in the statement of profit or loss that are not classified in the investing, financing, income taxes or discontinued operations categories: it is a residual category that does not exclude unusual or volatile items (B42).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• The operating category comprises the income and expenses that are not classified in any of the other four categories.L1
• Mélèze SA pays EUR 90,000 to settle a commercial dispute with a customer. The item is non-recurring but arises from its operating activities (case facts; entity with no specified main business activity). In which category of the statement of profit or loss is this expense classified?L2
• Orion SA, an industrial entity with no specified main business activity (case convention), reports for the year: sales revenue {revenue}; cost of sales {cost_of_sales}; distribution costs {distribution_costs}; administrative expenses {admin_expenses}; a payment to settle a commercial dispute, a non-recurring item arising from its operating activities, {litigation_settlement}; interest on a bank loan taken out to raise finance, {bank_loan_interest}; share of profit of an equity-accounted joint venture, {jv_share_of_profit}. Classify each item in its category, then calculate the total of the operating category.L3