Disclosures and reconciliation

Learning objectives

• Prepare the reconciliation of a measure with the most directly comparable specified subtotal.L2
• Calculate the measure from the specified subtotal and the reconciling items.L2, L3

Normative references

• IFRS 18 §123For each measure, labelled and described in a clear and understandable manner that does not mislead users, the entity discloses the aspect of performance communicated and why the measure is useful, how it is calculated, a reconciliation to the subtotal listed in para. 118 or the most directly comparable total or subtotal required by the Standards, the income tax effect and the effect on non-controlling interests of each reconciling item, and how the income tax effect was determined; under para. B141, that effect is calculated at the applicable statutory tax rate, on a reasonable pro rata allocation of current and deferred tax, or by another method that is more appropriate.
• IFRS 18 §122The entity discloses information about all its management-defined performance measures in a single note, which states that the measures provide management's view of an aspect of the financial performance of the entity as a whole and are not necessarily comparable with measures with similar labels used by other entities.

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

3 questions

• The information about management-defined performance measures is given in the notes and includes a reconciliation to the most directly comparable specified subtotal or total.L2
• Lisière SA publishes outside its financial statements an "operating profit before restructuring and brand impairment", which it regards as a management-defined performance measure (management's choice, case data). Its operating profit, the most directly comparable specified subtotal, is {operating_profit}. The reconciling items are restructuring costs of {restructuring_costs} and a brand impairment of {brand_impairment}, both included in operating profit. Calculate the measure.L2
• Ormeau SA publishes in its financial report an "operating profit before restructuring costs", which it regards as a management-defined performance measure (case data). What information must appear in the notes for this measure?L3