IFRS 8 Operating Segments

7/17/2019 IFRS 8 Operating Segments

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IFRS 8 – OperatingSegmentsissued in November 2006 and applies to annual periods

beginning on or after 1 Januar 200!"



#ore $rin%iple

&n entit is re'uired to dis%loseinformation to enable users of its(nan%ial statements to evaluate

t)e nature and (nan%ial e*e%ts oft)e tpes of business a%tivities in+)i%) it engages and t)e

e%onomi% environments in +)i%)it operates



S%ope

IFRS 8 applies to the separate or individual financialstatements of an entity (and to the consolidated

financial statements of a group with a parent):

◦ whose debt or equity instrument are traded in a

public market

◦ that files, or is in the process of filling, its

(consolidated) financial statements with a

securities commission or other regulatory

organisation for the purpose of issuing any class of

instruments in a public market [IFRS 8.2]



However, when both separate and consolidated

financial statements for the parent are presented

in a single financial report, segment information

need be presented only on the basis of the

consolidated financial statements [IFRS 8.4]



Operating Segments

IFRS 8 defines operating segment as follows. Anoperating segment is a component of an entity: [IFRS

8.2]

◦

that engages business activities from which it may earnrevenues and incur expenses

◦ whose operating results are reviewed regularly by the entity’s

chief operating decision maker to make decisions about

resources to be allocated to the segment and assess its

performance and

◦ for which discrete financial information is available.



#)ief Operating ,e%ision-a.er&llo%ate resour%es&ssess t)e performan%e of t)e

operating segments of t)e entit

Often/ )e is %)ief ee%utiveo%er or %)ief operating o%er



&ggregation of +o or -oreOperating Segments into One

+o or more operating segments ma beaggregated into a single operating segment if3

◦ &ggregation is %onsistent +it) t)e %ore prin%iple of IFRS84

◦ t)e segments )ave similar e%onomi% %)ara%teristi%s4 and

◦ t)e segments are similar in ea%) of t)e follo+ingrespe%ts3 t)e nature of t)e produ%ts and servi%es4

t)e nature of t)e produ%tion pro%esses4

t)e tpe or %lass of %ustomer for t)eir produ%ts and servi%es4

t)e met)ods used to distribute t)eir produ%ts or provide t)eirservi%es4 and

if appli%able/ t)e nature of t)e regulator environment 5e"g"ban.ing/ insuran%e/ or publi% utilities"



Reportable Segments

IFRS 8 requires an entity to report financial anddescriptive information about its reportable

segments. Reportable segments are operating

segments or aggregations of operating segments thatmeet specified criteria: [IFRS 8.13]

◦ it reported revenue, from both external customers and

intersegment sales or transfers, is 10 percent or more of thecombined revenue, internal and external, of all operating

segments, or



◦ the absolute measure of its reported profit or loss is 10

percent or more of the greater, in absolute amount, of (i) the

combined reported profit of all operating segments that did

not report a loss and (ii) the combined reported loss of all

operating segments that reported a loss, or

◦ its assets are 10 percent or more of the combined assets of all

operating segments.

Reportable Segments



Segment

Identi(able&ssets

7ternalrevenues

Internalrevenues

otal $ro(t59oss

& 10- 2:- :- ;0- 8-

< =- 8- 2- 10- 5;-

# =- 6- 1- >- 1-

, 20- :- 8- 1;- 5=-

7 11- 22- =- 26- 11-

otal &ssets =!-

otal Revenues of all segments 86-

#ombined pro(ts of all segments operating ata pro(t

20-

#ombined losses of all segments operating ata loss

>-



Identi(able assets are at least

="!- otal revenues are at least

8"6-

Operating result is at least

Segment

Identi(able&ssets

7ternalrevenues

Internalrevenues

otal $ro(t59oss

& 10- 2:- :- ;0- 8-

< =- 8- 2- 10- 5;-

# =- 6- 1- >- 1-

, 20- :- 8- 1;- 5=-

7 11- 22- =- 26- 11-



Operating segments t)at do not meet an of t)e

'uantitative t)res)olds outlined ma be

%onsidered reportable/ and separatel dis%losed/

if management believes t)at information about

t)e segment +ould be useful to users of t)e

(nan%ial statements"

Reportable Segments



If the total external revenue reported by operating

segments constitutes less than 75 percent of the

entity's revenue, additional operating segments must

be identified as reportable segments (even if they do

not meet the quantitative thresholds set out) until at

least 75 percent of the entity's revenue is included in

reportable segments. [IFRS 8.15]

Reportable Segments



Segment

Identi(able&ssets

7ternalrevenues

Internalrevenues

otal $ro(t59oss

& 10- 2:- :- ;0- 8-< =- 8- 2- 10- 5;-

# =- 6- 1- >- 1-

, 20- :- 8- 1;- 5=-

7 11- 22- =- 26- 11-

otal &ssets =!-

otal Revenues of all segments 86-

#ombined pro(ts of all segments operating ata pro(t

20-

#ombined losses of all segments operating ata loss

>-



Identi(able assets are at least

="!- otal revenues are at least

8"6-

Operating result is at least

Segment

Identi(able&ssets

7ternalrevenues

Internalrevenues

otal $ro(t59oss

& 10- 2:- :- ;0- 8-

< =- 8- 2- 10- 5;-

# =- 6- 1- >- 1-

, 20- :- 8- 1;- 5=-

7 11- 22- =- 26- 11-



,is%losure Re'uirementsRequired disclosures include:

◦ general information about how the entity identified its operating

segments and the types of products and services from which each

operating segment derives its revenues [IFRS 8.22]

◦ judgements made by management in applying the aggregation

criteria to allow two or more operating segments to be aggregated

[IFRS 8.22(aa)]*

◦ information about the profit or loss for each reportable segment,

including certain specified revenues** and expenses** such as

revenue from external customers and from transactions with other

segments, interest revenue and expense, depreciation and

amortisation, income tax expense or income and material non-cash

items [IFRS 8.21(b) and 23]



,is%losure Re'uirements

◦ a measure of total assets* and total liabilities* for each reportable

segment, and the amount of investments in associates and joint

ventures and the amounts of additions to certain non-current assets

('capital expenditure') [IFRS 8.23-24]

◦ an explanation of the measurements of segment profit or loss,

segment assets and segment liabilities, including certain minimum

disclosures, e.g. how transactions between segments are measured,

the nature of measurement differences between segment information

and other information included in the financial statements, and

asymmetrical allocations to reportable segments [IFRS 8.27]



,is%losure Re'uirements◦ reconciliations of the totals of segment revenues, reported

segment profit or loss, segment assets*, segment liabilities*and other material items to corresponding items in the entity's

financial statements [IFRS 8.21(b) and 28]

◦ some entity-wide disclosures that are required even when an

entity has only one reportable segment, including information

about each product and service or groups of products andservices [IFRS 8.32]

◦ analyses of revenues and certain non-current assets by

geographical area – with an expanded requirement to disclose

revenues/assets by individual foreign country (if material),irrespective of the identification of operating segments [IFRS

8.33]

◦ information about transactions with major customers [IFRS

8.34]

Documents

IFRS 8 Operating Segments