Lecture 8 - Disclosure Issues Flashcards
Segmental Reporting
Pros & Cons
Advantages
- Additional information
- Information about major customers and dependence levels
- Comparison between different segments
- Internal information about the company structure
- Better general understanding of FS
Disadvantages
- Costs of providing information
- Company might not want to disclose info about all segments
- Difficult to compare on segment with a differently defined one of a competitor
Segmental Reporting
Operating segments
Segmental Reporting
Reportable Segments
Segmental Reporting
Op and Rep segments - add info
Segmental Reporting
Aggregation criteria
Individual operating segments might be aggregated for reporting purposes if the segments have similar economic characteristics and are similar in each of the following aspects:
- Nature of the product / services
- Nature of production processes
- The type or class of customer for the P / S
- Methods of distribution
- if applicable, nature of the regulatory environment
Segmental Reporting
Disclosure
The “management approach” used in IFRS 8
= the segment informatino is based on what is reported internall to the CODM. Whatever the CODM uses to measure and assess the operating segments is what is disclosed externally under IFRS 8.
The only item that must be disclosed is a “measure” of segments result. That measure is whatever the CODM uses and need not to be the IFRS reported profits.
Mandatory Disclosures
- Factors used to identify the entitiy’s reportable segments, i.e. the basis of organization
- Types of P/S for which each reportable segments derives its revenues
- From 07/2014: judgements made m management in applying the aggregation criteria to allow 2 or more operating segments to be aggregated.
Segmental Reporting
Reconciliation
In order to link the disclosed segment data with the data published in the B/S and P/L, the following reconciliations have to be provided:
- The total of reporting segments’ revenues to the entity’s revenues
- The total of the reportable segments’ measures of P/L to the entity’s P/L before income tay expense/income and discontinued operations
- The roral of the reportable segments’ assets to the entity’s assets
- The total of the reportable segments’ amounts for every other material item of information disclosed to the corresponding amount of the entity.
Segmental Reporting
Entity Wide Disclosures
Events after reporting period
Adjusting Events
Events after reporting period
Non-Adjusting Events
Events after reporting period
Adjustements of Russio-Ukrain conflict
Consideringthereportingdate31December2021,impactsoftheeventswithregardstotheRussia- Ukraine conflict are non-adjusting events
Ø The changes in economic conditions and the political environment were triggered by the events that occurred after the reporting date, i.e., the invasion on 24 February 2022
§ Amountsrecognizedasof31December2021arenotimpactedbysucheventsthatoccurredafterthe reporting date
§ If,however,financialimpactsinthefollowingyeararematerial,companiesneedtoprovidethe nature of such events or changed conditions within their disclosures
§ Entitiesmustalsotakethechangesineconomicconditionsandpoliticalenvironmentintoaccount when assessing the overall going concern assumption
Ø For such, they make assumptions about the future based on all available information and possible outcomes of multiple events and scenarios
Events after reporting period
Dividends and Going Concern
Dividends
If dividends holders of equity instruments are declared after the B/S date, an entity shall not recognize those dividends as a liability at the B/S date.
Going Concern
If management determines after the B/S date either…
- that it intends to liquidate the enterprise
- cease trading
- or that it has no realistic alternative but to do so,…
The FS should no longer be prepared on a going concern and the accounts have to be completely withdrawn on a non-going concern basis.
EPS
Basic EPS
Diluted EPS (Part 1)
EPS
Diluted EPS (Part 2)
