ifrs 8- operating segments

Question 1

need of this standard

Answer 1

it’s better to show results of different segments like products, geographical, etc. its SH preference. helps them make better, more informed decisions

Question 2

scope

Answer 2

only mandatory for those whose equity or debt instruments traded in market (aka quoted companies)
other cos can apply voluntarily

Question 3

step #- identification of operating segment

Answer 3

3 conditions:

1) segment must engage in business activites, revenue earning activity or incur expenses
2) performance must be checked by a CODM(chief operating decision maker) person not necessary, may be a function, group.
3)separate cashflows, revenue and cost can be identified (discrete financial info)

if a function is INTEGRAL part of business, it may be dislosed as a segment even tho no revenue.

there must also be a segment manager

thats why corproate head quarters cannot be operating segment (no revenue only coordiantion)

Question 4

criticism

Answer 4

segment bannane ka ikhtiar company ko dedia
-if loss making segment, we dont meet codm condition. to not have to show loss separately
-it will impair comparability between companies

Question 5

step # 2- (identification of reportable segments)

Answer 5

only material segmetns are spearately reportable.

quantitative thresholds:
1) segment revenue is 10% or more of total revenue (internal + external) within org. sales will also be included

2)segment profit is 10% or more of total profit of all segments

3) segment assets is 10% or more of the total assets of all segments

only 1 threshold must be met. not all 3.

Question 6

step #3

Answer 6

75% test based on external revenue (dont include internal revenue in this)
-check whether reportable segments makes 75% of the total reveunue or not, otherise pick more segments (even if they r less than 10%)

Question 7

why 75% test

Answer 7

so max reporting is segment wise. naikiyaan zyada, buraiyaan kam.

Question 8

aggregation of segments

Answer 8

permitted but not required.
it is allowed when segments share similar economic characteristics.
eg:
types of customers
similar product
raw material
production process
distribution channel
law making body/ reg. body is same

Question 9

voluntary reporting of segment

Answer 9

even if immaterial, management thinks it will be relevant for users. eg. innovation. small rn but good for future.j

Question 10

major message of ifrs 8

Answer 10

make segments according to management accounting structure

Aka HOW U RUN YOUR BUSINESS

your financial reporting will also follow your cost and management reporting channel

This will save time and effort

Question 11

if a segment has a customer who is generating 10% revenue of the whole organisation

Answer 11

then this fact must be disclosed,
dont need to disclose customers name

Question 12

if some segments r pprofitable and some loss making

Answer 12

1)total all profit
2) total all loss

higher figure is denominator

Question 13

max how many segments

Answer 13

after 10 segments think if it will overburden SH.

Question 14

If segment was less than 10% last yr but is more than 10% now, so separately reportable

Answer 14

Show performance of segment in last yr comparatives