IAS 8

Question 1

What is IAS 8?

Answer 1

IAS 8 covers Operating Segments. It’s a disclosure standard and provides information to a decision maker.

Question 2

What is an Operating Segment?

Answer 2

It is a component of an entity that:

1. Generates revenue
2. Results get reviewed by the chief operating decision maker
3. Produces discrete (separable) financial information

Question 3

Who does IAS 8 relate to?

Answer 3

It’s only mandatory for a listed company. Stock market listing

Question 4

When is the Operating Segment reportable?

Answer 4

It is reportable when it is material to the group. Its based on size.

Question 5

When is an Operating Segment material?

Answer 5

It’s material to the group when:

1. Sales are at least 10% of total sales
   Or
2. Assets are at least 10% of total assets
   Or
3. Profit / loss is at least 10% of total

Question 6

What is the test for profit / loss thresholds?

Answer 6

Identify the profits, Identify the losses , take absolute values and calculate based on 10% of absolute figures. Use this as the threshold.

Question 7

What needs to be reported?

Answer 7

Information on
1. Sales
2. Profits
3. Asset usage

Question 8

What is the purpose of IAS 8?

Answer 8

It is to provide more information to a decision maker in order to make a decision.