Your client owns a factory, a let property and a portfolio of shares. Rent arrives, dividends arrive and the property is revalued. Which of those lines goes in the investing category under IFRS 18, and which stays in operating? If you are searching for the IFRS 18 investing category explained, this lesson is built around that exact problem.
Why the investing category matters
IFRS 18 gives the statement of profit or loss a fixed set of categories, and operating is the residual one. Anything that qualifies for investing has to be pulled out of operating first, so a line is placed by asking what kind of asset sits behind it, not by what the line is called.
What the lesson covers
- The sources of investing income and expenses that the standard names.
- The test for an asset that stands on its own, earning a return without help from the entity’s other operations.
- How the same facts read when a measurement election is made differently, with each route treated as a peer and followed through to the statements and disclosures.
- Why a journal entry stays the same while its presentation depends on the category.
- How the general rule differs for an entity that invests as a main business activity.
The worked example
We follow a South African manufacturer that also holds investment property and equity instruments. You apply the test to each holding, record the entries and build the investing total on stated assumptions. Decide where each line belongs before the lesson shows its answer.
Where students go wrong
The common error is to sort by label or by the entity’s trade instead of testing the asset, or to assume every cost linked to a holding follows it into the same category. The lesson shows why you test the asset and then check what the standard names for it.
Start the lesson
Enrol in the Amatle Institute IFRS 18 course and open the lesson on the investing category. Work the example before you read the solution, then test yourself on the practice questions that follow.
Questions about this topic
What goes in the investing category under IFRS 18?
Income and expenses from investments in associates, joint ventures and unconsolidated subsidiaries, from cash and cash equivalents, and from other assets that generate a return individually and largely independently of the entity's other resources. The general rule is set out in IFRS 18.53.
Is the investing category the same for every entity under IFRS 18?
No. The general rule applies to an entity that invests only as a sideline. An entity that invests in assets as a main business activity is subject to special rules, so its classification can differ.
Does IFRS 18 change how investment income is recognised?
No. IFRS 18 governs presentation, so the recognition journal is unchanged. The category decides where the income appears in the statement of profit or loss.
Free · one email a week
IFRS and SAM, one requirement at a time
Each week you get the Institute's new articles: one requirement of IFRS 17, IFRS 9, IFRS 15, IFRS 18 or SAM, worked on a South African case. You start with the free IFRS 18 readiness checklist, ten areas to work through before IFRS 18 takes effect, each with its paragraph reference.