The analysis of expenses by nature or by function

Learning objectives

• Distinguish the analysis of expenses by nature from the analysis by function.L2
• Determine the disclosures required in the notes when expenses are presented by function.L2, L3

Normative references

• IAS 1 §99An entity presents an analysis of expenses recognised in profit or loss using a classification based on either their nature or their function within the entity, whichever provides information that is reliable and more relevant; presenting this analysis in the statement of profit or loss is encouraged (para. 100), and an entity classifying expenses by function discloses additional information on their nature (para. 104).
• IAS 1 §104An entity classifying expenses by function discloses additional information on their nature, including depreciation and amortisation expense and employee benefits expense.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

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