Dear reader,

first and foremost I wish you happy new year 2026!

Have you ever tried a cold plunge in winter? Let me tell you about my routine real quick, and yes, this is still an accounting newsletter, I am getting to the point ;-)

Outside temperature around 8 degrees Celsius (46 Fahrenheit) or colder.

Arrive warmed-up (always).Take off protective layers of clothing, I prefer having the swimmsuit on. Walk to the water (4-12 degrees Celsius), take a deep breath and in. No dancing around. Not a single thought on how freezingly cold the water might be (it will). Just. In.

For accountants start of January often feels like a cold plunge on a cloudy winter day.

Year-end closings clash with the implementation of new regulations. Closing numbers do not match. (Re)writing disclosures can be a tedious task with never-ending approval loops. Workload (and pressure) rises and just as you can't take any more, someone important (a boss, an auditor) asks about that accounting memo you wrote back in August and requests major amendments asap.

So how to navigate cold January plunge after a cosy Christmas season?

One area where a warm-up before diving into cold, hostile waters is non-negotiable is the implementation of IFRS 18 Presentation and Disclosure in Financial Statements. The effective date as of January 1st, 2027 means that entities must prepare their 2026 comparatives in line with the new structure of the statement of profit and loss.

The topic of main business activity in accordance with IFRS 18 popped up on the IFRIC agenda recently - and should be on your agenda too.

More so if your entity maintains portfolio of activities, out of which some are investments in assets and/ or provision of financing to customers.

One may argue that IFRS 18 defies common sense by categorizing income and expenses from investment in assets and provision of financing to customers in operating category of the statement of profit and loss.

Determination of main business may especially be challenging in case of "add-ons" (customer financing) to more traditional activities (retail or manufacturing).

Typically, for the principle based IFRS there is no threshold given by the standard setter.

Paragraphs B30 - B41 of IFRS 18, mention indicators of main business activities such as:

i) performance of the activity is captured by distinct subtotals similar to gross profit; ii) business activity is a separate reporting segment; iii) entity is a bank, an investment entity or an insurer.

The key for the assessment is judgement backed by evidence. Entity's decision will materially impact:

Subtotals (operating profit or loss), Performance measures, External perception of an entity.

Albeit IFRS 18 does not prescribe the structure of the statement of cash flows, entities must observe that information presented accross all financial statements match *IFRS 18, paragraph B112 c) iii)).

My LinkedIn Quiz on Sunday tested your knowledge of the narrow scope amendments to IAS 28 Investments in Associates and Joint ventures.

The goal of the amendments is to provide more clarification on which entities may apply the scope exception from applying the equity method in accordance with IAS 28.

In the upcoming Exposure Draft (February 2026) the IASB aims to clarify that these are entities that invest into associates and joint ventures as their main business activity.

The Accounting Highlight of the week and a great resource to have handy is the PWC Accounting News.

For example a short summary on how tariffs impact different items (inventories, P,P&E or revenue) in accordance with US GAAP will be beneficial for IFRS preparers too as most of the principles overlap.

The article is centered around short questions from practice, which are well-explained.

Accounting implications of tariffs

It doesn’t matter whether you’re about to jump into a cold lake in winter or navigate the year-end frenzy unscathed. Warm up by learning ahead of the game. You’ll marvel at how well you did afterward.

Have a great accounting week.

Best,

Barbora

p.s.: Do you have questions? Wishes for upcoming newsletters? Just write me back!