4. Segment Reporting

Question 1

Definition: Operating segment

Answer 1

Component of an entity (all have to be correct)
(a) that engages in business activities from which it may earn revenues and incur expenses,
(b) 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; and
(c) for which discrete financial information is available.

Question 2

Reportable segments

Answer 2

An entity must report separately information about an operating segment if
▪ The definition of an operating segment applies or if it results from aggregating two or more of those segments and
▪ The operating segment meets any of the following quantitative thresholds:
▪ Segment revenue is 10% or more of the combined revenue of all operating segments.
▪ Segment profit or loss is 10% or more of the greater (1) the combined profit of all segments not reporting a loss and (2) the combined loss of all segments reporting a loss.
▪ Segment assets are 10% or more of the combined assets of all operating segments.
->Operating segments that do not meet any of the quantitative thresholds may be combined with other operating segments that do not meet any of the quantitative thresholds to produce a reportable segment only if the operating segments have similar economic characteristics and share a majority of the aggregation criteria listed in paragraph 12 (IFRS 8.14).
▪ 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 until at least 75% of the entity‘s revenue is included in reportable segments (IFRS 8.15).

Question 3

Other Segments

Answer 3

▪ Operating segments that do not meet any of the quantitative thresholds may be disclosed separately if management believes that information about the segment would be useful to users of financial statements (IFRS 8.13).
▪ Operating segments that are not reportable and other business activities must be combined and disclosed in an “all other segments” category separately from other reconciling items in the reconciliations required (IFRS 8.16).

Question 4

Segment information

Answer 4

▪ General information
▪ Information about profit or loss and assets/liabilities
▪ Reconciliations

Question 5

Measurement of segment data

Answer 5

▪ The segment information is based on data management uses internally for the purpose of making decisions about allocating resources to the segment and assessing its performance.
- Segment profit:
- only one performance measure:: this measure is reported (e.g., imputed profit)
- more than one measure: the measure most consistent with IFRS is reported