Document ID: chunk:federal_register_of_legislation:F2024L00708:body:0:p50
Version: federal_register_of_legislation:F2024L00708
Segment Type: other
Provision Reference: 
Character Range: 133760–136733

income or expense); and
(i) whether the income or expenses arise on initial recognition of a transaction or event or from a subsequent change in estimate relating to the transaction or event.
B79 Income and expenses that might have sufficiently dissimilar characteristics that presentation in the statement of profit or loss is necessary to provide a useful structured summary or disclosure in the notes is necessary to provide material information include:
(a) write-downs of inventories, as well as reversals of such write-downs;
(b) impairment losses for property, plant and equipment, as well as reversals of such impairment losses;
(c) income and expenses from restructurings of an entity's activities and reversals of any provisions for restructuring;
(d) income and expenses from disposals of property, plant and equipment;
(e) income and expenses from disposals of investments;
(f) income and expenses from litigation settlements;
(g) reversals of provisions; and
(h) non-recurring income and expenses not included in (a)–(g).

Presentation and disclosure of expenses classified in the operating category

Use of characteristics of nature and function
B80 In determining how to use the characteristics of nature and function to provide the most useful structured summary as required by paragraph 78, an entity shall consider:
(a) what line items provide the most useful information about the main components or drivers of the entity's profitability. For example, for a retail entity a main component or driver of profitability might be cost of sales. Presenting a cost of sales line item might provide relevant information about whether the revenue generated from the sale of goods covers what, for retailers, are mainly direct costs, and by what margin. However, cost of sales is unlikely to provide relevant information about the important components or drivers of profitability if the link between revenue and costs is less direct. For example, for some service entities, information about operating expenses classified by nature, such as employee benefits, might be more relevant to users of financial statements because these expenses are the main drivers of profitability.
(b) what line items most closely represent the way the business is managed and how management reports internally. For example, a manufacturing entity managed on the basis of major functions might classify expenses by function for internal reporting purposes. In contrast, an entity that has a single predominant function, such as providing financing to customers, might determine that line items comprising expenses classified by nature provide the most useful information for internal reporting purposes.
(c) what standard industry practice entails. If expenses are classified in the same way by entities in an industry, users of financial statements can more easily compare expenses between entities in the same industry.
(d) whether the allocation of particular expenses to functions