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CORPORATE REPORTING
(P2)
IFRS 8 OPERATING
SEGMENT
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Operating segment
1. That engages in business activities from
which it may earn revenues and incur
expenses
2. Whose operating results are regularly
reviewed by the entity’s chief operating
decision maker to make decisions about
resources to be allocated to the segment
and assess its performance
3. For which discrete financial information is
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available
Reportable Segments
An entity’s reportable segments (its
operating segments) are those that are
used in its internal management reports.
Therefore management identifies the
operating segments.
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Quantitative thresholds
1. Its reported revenue, including both sales
to external customers and inter-segment
sales or transfers, is 10% or more of the
combined internal and external revenue
of all operating segments;
2. Its reported profit or loss is 10% or more
of the greater, in absolute amount, of
a) The combined reported profit of all operating
segments that did not report a loss and
b) The combined reported loss of all operating
segments that reported a loss; or 5
Quantitative thresholds
3. Its assets are 10% or more of the
combined assets of all operating
segments
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Quantitative thresholds
If the total external revenue reported by
operating segments constitutes less than
75% of the entity's revenue, additional
operating segments must be identified as
reportable segments (even if they do not
meet the rules above) until at least 75% of
the entity's revenue is included in
reportable segments.
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Disclosures
◼ Factors used to identify reporting
segments and the types of products and
services from which each reportable
segment derives its revenues
◼ Profit or loss and total assets for each
reportable segment and liabilities of those
segments if reported to the chief operating
decision maker. Additionally, the following
items would be disclosed:
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1. Revenues from external customers;
2. Revenues from transactions with other
operating segments of the same entity;
3. Interest revenue;
4. Interest expense;
5. Depreciation and amortisation;
6. material items of income and expense
(disclosed per IAS 1);
7. Interests in profit or loss of associates
and joint ventures who are equity
accounted; 9
8. Income tax expense or income;
9. Material non-cash items other than
depreciation and amortisation;
10. Investment in associates and joint
ventures who are equity accounted;
11. Additions to non-current assets.
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Disclosure
◼ Reconciliations of the totals of segment
revenues, reported segment profit or loss,
segment assets, segment liabilities and
other material segment items to the total
amounts reported in the entity's financial
statements.
◼ Revenues from external customers for
each product and service or group of
similar products and services.
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Disclosure
◼ Revenues from external customers
attributed to the entity’s home country and
all foreign countries from
◼ which revenue is derived. Also, non-
current assets located in the entity’s home
country and located in all foreign countries
where the entity holds assets.
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Disclosure
◼ Information about the extent of the entity’s
reliance on major customers. If more than
10% of revenue is derived from one
customer then this must be disclosed
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Measurement
◼ The basis of accounting for any
transactions between reportable segments
◼ The nature of differences between the
measurement of segment profit or loss,
assets and liabilities and the amounts
reported in the financial statements.
Differences could result from accounting
policies and/or policies for the allocation of
common costs and jointly used assets to
segments
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Measurement
◼ The nature of any changes from prior
periods in measurement methods
◼ The nature and effect of any asymmetrical
allocations to segments (for example,
where an entity allocates depreciation
expense but not the related non-current
assets).
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END
THANK YOU
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