Corporations following IFRS must classify their expenses either by nature or by function.

Question

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Under IFRS (International Financial Reporting Standards), corporations have the option to present their expenses in the income statement either by nature (such as depreciation, purchases, or employee benefits) or by function (such as cost of goods sold, selling, or administrative expenses). This choice allows entities to present their expenses in the manner that most faithfully represents the entity's operations.

Corporations Following IFRS Must Classify Their Expenses Either by Nature