An International Financial Reporting Standards (IFRS) income statement is a financial performance document that has been prepared according to the guidelines of the International Accounting Standards Board (IASB). It consists of revenues and expenses from a specific period of time. The guidelines of this particular method help to ensure that statements are understandable outside of domestic boundaries. They became widely used with the growth of international trade.
The IFRS income statement is typically completed along with a statement of comprehensive income. While an income statement outlines the basics of profit and loss, the comprehensive document reconciles those elements. The two documents together are sometimes referred to as the statement of comprehensive income, with the more detailed document serving as a sort of umbrella over the income statement.
A typical IFRS income statement will be completed as a part of the overall financial statements of an organization. Other documents typically included in this group are the statements of financial position, changes in equity, and cash flows. There will also often be additional notes added to the end of the gathered financial statements, which are meant to explain details and otherwise guide the reader through the documents.
There are several qualitative characteristics required for an IFRS income statement. They include that the document have relevance, comparability, reliability, and understandability. These guidelines apply to all other IFRS statements as well.
The IFRS income statement tends to be found in larger companies. This is primarily because of the nature of IFRS accounting. It tends to be most useful to companies with an international presence that must communicate with internal and external audiences worldwide. While other forms of accounting, such as the generally accepted accounting principles (GAAP), continue to be widespread — and are particularly popular among small to mid-sized companies — they do not have the global reach of IFRS.
A major difference between the guidelines for the IFRS income statement and other forms of accounting is that they are often more specific about content. Things such as how items are classified and described and how specific the information must be are generally more rigid. There is also less flexibility as to the timing of reporting certain items and the way in which they are presented. While this can increase the complexity of completing a statement, it can also help to make it more precise. These restrictions usually make the statement easier for a wider, more diverse audience to understand.
