For example a company can reclassify inventory from raw materials to work in progress or finished goods based on production stage or market demand. Operating expenses Companies can reclassify certain operating expenses into different categories to provide a clearer representation of their cost structure. For example a manufacturing company may reclassify.
Certain production costs from Sierra Leone Email List operating costs to cost of goods sold to accurately reflect the direct costs associated with the production process. Also read Types of Debts and Receivables in Accounting and the Differences Financial instruments Companies may reclassify financial instruments such as investments or derivatives based on changes in their purpose or objectives.
For example a company may reclassify an investment from trading to held to maturity based on a decision to hold the investment to maturity and not actively trade it. With the introduction of PSAK companies can reclassify lease arrangements from operating leases to finance leases or vice versa. This reclassification has an impact on the recognition and presentation of lease assets and liabilities on the balance sheet.