What does IFRS state regarding the classification of assets or liabilities for overfunded plans?

IFRS does not impose a specific classification requirement for overfunded plans, allowing entities the flexibility to determine their classification based on the overall context of the financial position and the expected realization of the overfunded amounts. This approach aligns with the broader principle-based nature of IFRS, which emphasizes that the classification should reflect the underlying economic realities rather than strict rules.

In the case of overfunded plans, the entity may assess various factors such as when the benefits can be utilized or when the surplus may ultimately be settled. Since there is no prescriptive guidance, companies can choose the classification method that best reflects their specific circumstances, provided that the overall financial statements present a true and fair view.

This opportunity for judgment in classification has implications for how financial position is represented and can impact ratios and analyses that stakeholders use to evaluate the company's health. Having clarity on these classifications contributes to a more accurate display of the entity's financial status, enabling improved decision-making for financial statement users.