ACCA Strategic Professional · Strategic Business Reporting (International) · Discussion of issues in financial reporting

Zentra plc reports 'adjusted EBITDA' in its annual report and excludes restructuring costs, which it has incurred in each of the last four years. Under IFRS 18 Presentation and Disclosure in Financial Statements, which feature would most clearly cause this measure to be treated as a management-defined performance measure requiring specific disclosure?

A measure such as adjusted EBITDA is a management-defined performance measure under IFRS 18 because it is an income and expense subtotal used in public communications to convey management's view of performance and is not a subtotal specified by IFRS Accounting Standards. It therefore needs specific disclosures.

1. AIt is a subtotal of income and expenses used in public communications outside the statement of profit or loss to convey management's view of performance, and is not specified by IFRS Accounting StandardsCorrect
2. BIt is calculated using only amounts taken directly from the statement of cash flows
3. CIt is a subtotal that IFRS 18 requires to be presented in the statement of profit or loss
4. DIt is a ratio of assets to liabilities disclosed in the notes