IFRS 18 transition guidance
Mandatory effective date:
📅 Applies from 1 January 2027 (early application is permitted).
🔁 1. Retrospective application
When applying IFRS 18 for the first time, companies must restate comparative financial information:
| Period | How it is applied |
|---|---|
| 2026 (comparative year) | Must be restated under the new structure |
| 2027 (year of first application) | Must be presented under the new structure |
In other words:
- The 2026 income statement and disclosures must be re-prepared under IFRS 18
- For 2027, financial statements are presented under IFRS 18 for the first time
📌 2. Transition disclosure
In the year of first application, a specific note explaining the effects of the transition to IFRS 18 must be presented. For the comparative period, this note explains the differences between:
- the previous financial information presented under IAS 1, and
- the information restated under IFRS 18.
📄 Example note disclosure (transition and MPM disclosure)
🔹 Note X: Transition to IFRS 18
The Company has applied IFRS 18 "Presentation and Disclosure in Financial Statements" from the accounting period beginning on 1 January 2027. IFRS 18 changes the structure of the income statement, makes certain subtotals mandatory and requires disclosure of management-defined performance measures.
Accordingly, the comparative income statement for 2026 has been restated and is presented below. The reconciliation of the differences between the previous presentation and IFRS 18 is set out below.
| Line item | 2026 under IAS 1 | 2026 under IFRS 18 | Explanation |
|---|---|---|---|
| Gross profit | 400 | 400 | No change |
| Operating profit | Not presented | 250 | New mandatory subtotal |
| Finance costs | (40) | (40) | In the financing category |
| Tax expense | (60) | (60) | In the income taxes category |
| Net profit | 150 | 150 | No change |
🔹 Note Y: Management-defined performance measures (MPMs)
In its public communications, the Company shares with users of its financial statements the "Adjusted Operating Profit" measure that management uses to assess performance. Under IFRS 18, this measure is a "management-defined performance measure" (MPM) and is disclosed as follows:
Definition:
Adjusted operating profit is calculated from operating profit as defined in IFRS 18, excluding one-off restructuring costs and impairment losses.
Calculation and reconciliation:
| Line item | Amount (TRY thousand) |
|---|---|
| Operating profit under IFRS 18 | 250 |
| + Restructuring costs (one-off) | 20 |
| + Impairment of intangible assets | 10 |
| = Adjusted operating profit (MPM) | 280 |
The effect on tax and non-controlling interests is also disclosed for each reconciling item. This measure helps the Company's management assess underlying operating performance more accurately and is analytically useful for period-on-period comparisons.
🧾 Steps companies should take to prepare
- Review existing financial statement templates
- Run dual-presentation (IAS 1 and IFRS 18) tests for 2026 now
- Identify MPMs and integrate them into processes
- Train accounting and reporting teams
- Update note formats and software
Let's assess the impact on your company together
Our specialists will clarify, in a short call, how regulatory changes affect your financial statements and obligations.
- Under founding-partner supervision
- Member of the SFAI international network
- Written, transparent proposal
or call: +90 212 951 02 47
This publication is for general information only and is not a substitute for professional advice.