Abstract

We explore the vagueness among property, plant, and equipment (PPE), intangible asset and inventory accounts that leads to liquidity level misrepresentation. Through the configurational approach, we identified five arrangements according to the intensity of property rights transference. Our purpose is to highlight the epistemic vagueness on liquidity order classification of assets' items, in order to justify additional disclosure or other regulation strategies to reduce informational asymmetry. Even though IASB's accounting regulation accepts the presentation of balance sheet (BS) classified by items' liquidity order, the traditional current/non-current classification of BS seems to have been used as a straitjacket, where inventories are current assets, and PPE and intangibles are non-current assets. While the gray zone is ignored, items that lay on that are swept under the rug, information asymmetry persists, and neglected by auditors and standard setters.