Classification criteria to define and disclose

Learning objectives

• Identify the classification criteria to be disclosed when classification is difficult.L3, L4

Normative references

• IAS 40 §14Classification requires judgement: the entity develops criteria so that it can exercise that judgement consistently with the definition and paras. 7-13; para. 75(c) requires those criteria to be disclosed when classification is difficult.

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

2 questions

• When the classification of a property (investment property, owner-occupied property or inventory) is difficult, what must the entity do?L3
• A group holds partly leased buildings whose classification is difficult. In three to five sentences, explain what the entity must define and disclose, and why this helps the reader of the financial statements.L4