Final answer:
According to IAS 1, Presentation of Financial Statements, if an item is considered commercially sensitive and could influence the economic decisions of users, it is considered material.
Step-by-step explanation:
According to IAS 1, Presentation of Financial Statements, if the directors of Lagon plc wish to omit an item from the company's financial statements on the grounds that it is commercially sensitive and would influence the users of the information when making economic decisions, the item is considered material. Materiality is an important concept in accounting, which states that information should only be included in the financial statements if its omission or misstatement could influence the decisions of the users of the information. Items that are considered material are those that could potentially impact the economic decisions of the users.
Therefore, option C, material, is the correct answer in this case. The directors of Lagon plc are considering the omission of an item from the company's financial statements because the information is commercially sensitive and could influence the economic decisions of its users. According to IAS 1, Presentation of Financial Statements, such an item would be designated as material. Omitting material information can mislead investors and stakeholders who rely on disclosures to make informed decisions. As firms grow and strategies are set to lead to potential profits, the necessity for investors to know managers on a personal level diminishes due to the abundance of information accessible about the company's products, revenues, costs, and profits. This change in the accessibility of information means that outside investors, including bondholders and shareholders, who might not be personally acquainted with the management, feel more comfortable providing financial capital to the firm.