Expenses by nature, by function or both

Learning objectives

• Distinguish presentation by nature from presentation by function.L2
• Determine the additional information required when expenses are presented by function.L2, L3

Normative references

• IFRS 18 §78In the operating category, the entity classifies and presents its expenses in the way that provides the most useful structured summary, by nature, by function or using a combination of both; each line item aggregates expenses on the basis of only one of these characteristics (para. 79), and presentation by function triggers the disclosures in paras. 82 and 83.

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

3 questions

• Brio SA presents its operating expenses in a mix: the lines "Cost of sales" and "Distribution costs" are classified by function, while the line "Depreciation and amortisation" is classified by nature (case facts). What additional information must Brio provide?L3
• Which statements about the presentation of operating expenses under IFRS 18 are correct? More than one answer is possible.L2
• How does IFRS 18 require operating expenses to be presented in the statement of profit or loss?L2