International Financial Reporting Standard 8  
Operating Segments

 

In April 2001 the International Accounting Standards Board (IASB) adopted IAS 14 Segment Reporting, which had originally been issued by the International Accounting Standards Committee in August 1997. IAS 14 Segment Reporting replaced IAS 14 Reporting Financial Information by Segment, issued in August 1981 In November 2006 the IASB issued IFRS 8 Operating Segments to replace IAS 14. IAS 1 Presentation of Financial Statements (as revised in 2007) amended the terminology used throughout IFRSs, including IFRS 8 Other IFRSs have made minor consequential amendments to IFRS 8. They include

Improvements to IFRSs (issued April 2009), IAS 24 Related Party Disclosures (issued November 2009), IFRS 10 Consolidated Financial Statements (issued May 2011), IAS 19 Employee Benefits (issued June 2011) and Annual Improvements to IFRSs 2010-2012 Cycle (issued December 2013)

from paragraph  INT

 

INTRODUCTION

INTERNATIONAL FINANCIAL REPORTING STANDARD 8

OPERATING SEGMENTS

1

2

5

11 

12

13

20

22

23

25

28

 

29

31

 

32

 

33

34

35

37

CORE PRINCIPLE

SCOPE

OPERATING SEGMENTS

REPORTABLE SEGMENTS

Aggregation criteria

Quantitative thresholds

DISCLOSURE

General information

Information about profit or loss, assets and liabilities

MEASUREMENT Reconciliations

Restatement of previously reported information

ENTITY-WIDE DISCLOSURES

Information about products and services

Information about geographical areas

Information about major customers TRANSITION AND EFFECTIVE DATE

WITHDRAWAL OF IAS 14

APPENDICES

A Defined term

B Amendments to other IFRSs

International Financial Reporting Standard 8 Operating Segments (IFRS 8) is set out in paragraphs 1-37 and Appendices A and B. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Definitions of terms are given in the Glossary for International Financial Reporting Standards. IFRS 8 should be read in the context of its core principle and the Basis for Conclusions, the Preface to International Financial Reporting Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance

Introduction Reasons for issuing the IFRS

IN1 International Financial Reporting Standard 8 Operating Segments sets out requirements for disclosure of information about an entity's operating segments and also about the entity's products and services, the geographical areas in which it operates, and its major customers

IN2 Achieving convergence of accounting standards around the world is one of the prime objectives of the International Accounting Standards Board. In pursuit of that objective, the Board and the Financial Accounting Standards Board (FASB) in the United States have undertaken a joint short-term project with the objective of reducing differences between International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (US GAAP) that are capable of resolution in a relatively short time and can be addressed outside major projects. One aspect of that project involves the two boards considering each other's recent standards with a view to adopting high quality financial reporting solutions. The IFRS arises from the IASB's consideration of FASB Statement No. 131 Disclosures about Segments of an Enterprise and Related Information (SFAS 131) issued in 1997, compared with IAS 14 Segment Reporting, which was issued in substantially its present form by the IASB's predecessor body, the International Accounting Standards Committee, in 1997

IN3 The IFRS achieves convergence with the requirements of SFAS 131, except for minor differences listed in paragraph BC60 of the Basis for Conclusions. The wording of the IFRS is the same as that of SFAS 131 except for changes necessary to make the terminology consistent with that in other IFRSs

Main features of the IFRS

IN4 The IFRS specifies how an entity should report information about its operating segments in annual financial statements and, as a consequential amendment to IAS 34 Interim Financial Reporting, requires an entity to report selected

IN5 information about its operating segments in interim financial reports. It also sets out requirements for related disclosures about products and services, geographical areas and major customers

IN6 The IFRS requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segment The IFRS requires an entity to report a measure of operating segment profit or loss and of segment assets. It also requires an entity to report a measure of

IFRS Foundation segment liabilities and particular income and expense items if such measures are regularly provided to the chief operating decision maker. It requires reconciliations of total reportable segment revenues, total profit or loss, total assets, liabilities and other amounts disclosed for reportable segments to corresponding amounts in the entity's financial statements

 IN7 The IFRS requires an entity to report information about the revenues derived from its products or services (or groups of similar products and services), about the countries in which it earns revenues and holds assets, and about major customers, regardless of whether that information is used by management in making operating decisions. However, the IFRS does not require an entity to report information that is not prepared for internal use if the necessary

IN8 information is not available and the cost to develop it would be excessive

 IN9 The IFRS also requires an entity to give descriptive information about the way the operating segments were determined, the products and services provided by the segments, differences between the measurements used in reporting segment information and those used in the entity's financial statements, and changes in the measurement of segment amounts from period to period

An entity shall apply this IFRS for annual periods beginning on or after 1 January 2009. Earlier application is permitted. If an entity applies this IFRS for an earlier period, it shall disclose that fact

Changes from previous requirements

 IN10The IFRS replaces IAS 14 Segment Reporting. The main changes from IAS 14 are described below

Identification of segments

 IN11 The requirements of the IFRS are based on the information about the

components of the entity that management uses to make decisions about operating matters. The IFRS requires identification of operating segments on the basis of internal reports that are regularly reviewed by the entity's chief operating decision maker in order to allocate resources to the segment and

assess its performance. IAS 14 required identification of two sets of

segments—one based on related products and services, and the other on geographical areas. IAS 14 regarded one set as primary segments and the other as secondary segments

 IN12 A component of an entity that sells primarily or exclusively to other operating segments of the entity is included in the IFRS's definition of an operating segment if the entity is managed that way. IAS 14 limited reportable segments to those that earn a majority of their revenue from sales to external customers and therefore did not require the different stages of vertically integrated operations to be identified as separate segments

Measurement of segment information

IN13 The IFRS requires the amount reported for each operating segment item to be

the measure reported to the chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance. IAS 14

IN14 required segment information to be prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the consolidated group or entity

 IN15 IAS 14 defined segment revenue, segment expense, segment result, segment assets and segment liabilities. The IFRS does not define these terms, but requires an explanation of how segment profit or loss, segment assets and segment liabilities are measured for each reportable segment

Disclosure

The IFRS requires an entity to disclose the following information

 (a) factors used to identify the entity's operating segments, including the basis of organisation (for example, whether management organises the entity around differences in products and services, geographical areas, regulatory environments, or a combination of factors and whether segments have been aggregated), and

  (b) types of products and services from which each reportable segment derives its revenues

 IN16 IAS 14 required the entity to disclose specified items of information about its primary segments. The IFRS requires an entity to disclose specified amounts about each reportable segment, if the specified amounts are included in the measure of segment profit or loss and are reviewed by or otherwise regularly provided to the chief operating decision maker

 IN17 The IFRS requires an entity to report interest revenue separately from interest expense for each reportable segment unless a majority of the segment's revenues are from interest and the chief operating decision maker relies primarily on net interest revenue to assess the performance of the segment and to make decisions about resources to be allocated to the segment. IAS 14 did not require disclosure of interest income and expense

 IN18 The IFRS requires an entity, including an entity with a single reportable segment, to disclose information for the entity as a whole about its products and services, geographical areas, and major customers. This requirement applies, regardless of the entity's organisation, if the information is not included as part of the disclosures about segments. IAS 14 required the disclosure of secondary segment information for either industry or geographical segments, to supplement the information given for the primary segments

International Financial Reporting Standard 8 Operating Segments  Core principle

 1An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates Scope 

This IFRS shall apply to the separate or individual financial statements of an entity whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter

market, including local and regional markets), or that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; and the consolidated financial statements of a group with a parent whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or that files, or is in the process of filing, the consolidated financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market

3If an entity that is not required to apply this IFRS chooses to disclose information about segments that does not comply with this IFRS, it shall not describe the information as segment information

If a financial report contains both the consolidated financial statements of  parent that is within the scope of this IFRS as well as the parent's separate financial statements, segment information is required only in the consolidated financial statements

Operating segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity 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 for which discrete financial information is available An operating segment may engage in business activities for which it has yet t earn revenues, for example, start-up operations may be operating segments before earning revenues

6 Not every part of an entity is necessarily an operating segment or part of an operating segment. For example, a corporate headquarters or some functional departments may not earn revenues or may earn revenues that are only incidental to the activities of the entity and would not be operating segments. For the purposes of this IFRS, an entity's post-employment benefit plans are not operating segments The term 'chief operating decision maker' identifies a function, not necessarily a

manager with a specific title. That function is to allocate resources to and assess the performance of the operating segments of an entity. Often the chief operating decision maker of an entity is its chief executive officer or chief operating officer but, for example, it may be a group of executive directors or others For many entities, the three characteristics of operating segments described in

paragraph 5 clearly identify its operating segments. However, an entity may produce reports in which its business activities are presented in a variety of ways. If the chief operating decision maker uses more than one set of segment information, other factors may identify a single set of components as constituting an entity's operating segments, including the nature of the business activities of each component, the existence of managers responsible for them, and information presented to the board of directors

Generally, an operating segment has a segment manager who is directly accountable to and maintains regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts, or plans for the segment. The term 'segment manager' identifies a function, not necessarily a manager with a specific title. The chief operating decision maker also may be the segment manager for some operating segments. A single manager may be the segment manager for more than one operating segment

If the characteristics in paragraph 5 apply to more than one set of components of an organisation but there is only one set for which segment managers are held responsible, that set of components constitutes the operating segments
The characteristics in paragraph 5 may apply to two or more overlapping sets of components for which managers are held responsible. That structure is sometimes referred to as a matrix form of organisation. For example, in some entities, some managers are responsible for different product and service lines worldwide, whereas other managers are responsible for specific geographical areas. The chief operating decision maker regularly reviews the operating results of both sets of components, and financial information is available for both. In that situation, the entity shall determine which set of components constitutes the operating segments by reference to the core principl

Reportable segments

An entity shall report separately information about each operating segment that has been identified in accordance with paragraphs 5-10 or results from aggregating two or more of those segments in accordance with paragraph 12, and exceeds the quantitative thresholds in paragraph 13 Paragraphs 14-19 specify other situations in which separate information about an operating segment shall be reported

Aggregation criteria

Operating segments often exhibit similar long-term financial performance if they have similar economic characteristics. For example, similar long-term average gross margins for two operating segments would be expected if their economic characteristics were similar. Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of this IFRS, the segments have similar economic characteristics and the segments are similar in each of the following respects

the nature of the products and services

the nature of the production processes

the type or class of customer for their products and services

the methods used to distribute their products or provide their service and

if applicable, the nature of the regulatory environment, for example, banking, insurance or public utilities

Quantitative thresholds

An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments The absolute amount of its reported profit or loss is 10 per cent 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 Its assets are 10 per cent or more of the combined assets of all operating segments Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements

An entity may combine information about operating segments that do not meet the quantitative thresholds with information about other operating segments that do not meet 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

If the total external revenue reported by operating segments constitutes less than 75 per cent of the entity's revenue, additional operating segments shall be identified as reportable segments (even if they do not meet the criteria in paragraph 13) until at least 75 per cent of the entity's revenue is included in reportable segments

Information about other business activities and operating segments that are not reportable shall be combined and disclosed in an 'all other segments' category separately from other reconciling items in the reconciliations required by paragraph 28. The sources of the revenue included in the 'all other segments' category shall be described

If management judges that an operating segment identified as a reportable segment in the immediately preceding period is of continuing significance, information about that segment shall continue to be reported separately in the current period even if it no longer meets the criteria for reportability in paragraph 13

If an operating segment is identified as a reportable segment in the current period in accordance with the quantitative thresholds, segment data for a prior period presented for comparative purposes shall be restated to reflect the newly reportable segment as a separate segment, even if that segment did not satisfy the criteria for reportability in paragraph 13 in the prior period, unless the necessary information is not available and the cost to develop it would be excessive

There may be a practical limit to the number of reportable segments that an entity separately discloses beyond which segment information may become too detailed. Although no precise limit has been determined, as the number of segments that are reportable in accordance with paragraphs 13-18 increases above ten, the entity should consider whether a practical limit has been reached

Disclosure An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates

To give effect to the principle in paragraph 20, an entity shall disclose the following for each period for which a statement of comprehensive income is presented information about reported segment profit or loss, including specified revenues and expenses included in reported segment profit or loss, segment assets, segment liabilities and the basis of measurement, as described in paragraphs 23-27; and reconciliations of the totals of segment revenues, reported segment profit or loss, segment assets, segment liabilities and other material segment items to corresponding entity amounts as described in paragraph 28

Reconciliations of the amounts in the statement of financial position for reportable segments to the amounts in the entity's statement of financial position are required for each date at which a statement of financial position is presented. Information for prior periods shall be restated as described in paragraphs 29 and 30

General information

factors used to identify the entity's reportable segments, including the basis of organisation (for example, whether management has chosen to organise the entity around differences in products and services, geographical areas, regulatory environments, or a combination of factors and whether operating segments have been aggregated

the judgements made by management in applying the aggregation criteria in paragraph 12. This includes a brief description of the operating segments that have been aggregated in this way and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics and types of products and services from which each reportable segment derives its revenues

Information about profit or loss, assets and liabilities

An entity shall report a measure of profit or loss for each reportable segment

An entity shall report a measure of total assets and liabilities for each reportable segment if such amounts are regularly provided to the chief operating decision maker. An entity shall also disclose the following about each reportable segment if the specified amounts are included in the measure of segment profit or loss reviewed by the chief operating decision maker, or are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss

revenues from external customers

revenues from transactions with other operating segments of the same entity

interest revenue

interest expense

depreciation and amortisation

material items of income and expense disclosed in accordance with paragraph 97 of IAS 1 Presentation of Financial Statements (as revised in2007)

the entity's interest in the profit or loss of associates and joint ventures accounted for by the equity method income tax expense or income; and material non-cash items other than depreciation and amortisatio

An entity shall report interest revenue separately from interest expense for each reportable segment unless a majority of the segment's revenues are from interest and the chief operating decision maker relies primarily on net interest revenue to assess the performance of the segment and make decisions about resources to be allocated to the segment. In that situation, an entity may report that segment's interest revenue net of its interest expense and disclose that it has done so

An entity shall disclose the following about each reportable segment if the specified amounts are included in the measure of segment assets reviewed by the chief operating decision maker or are otherwise regularly provided to the chief operating decision maker, even if not included in the measure of segment assets

Measurement

the amount of investment in associates and joint ventures accounted for by the equity method, and the amounts of additions to non-current assets1 other than financial instruments, deferred tax assets, net defined benefit assets (see IAS 19 Employee Benefits) and rights arising under insurance contracts

The amount of each segment item reported shall be the measure reported to the chief operating decision maker for the purposes of making decisions about allocating resources to the segment and assessing its performance. Adjustments and eliminations made in preparing an entity's financial statements and allocations of revenues, expenses, and gains or losses shall be included in determining reported segment profit or loss only if they are included in the measure of the segment's profit or loss that is used by the chief operating decision maker. Similarly, only those assets and liabilities that are included in the measures of the segment's assets and segment's liabilities that are used by the chief operating decision maker shall be reported for that segment. If amounts are allocated to reported segment profit or loss, assets or liabilities, those amounts shall be allocated on a reasonable basis

If the chief operating decision maker uses only one measure of an operating segment's profit or loss, the segment's assets or the segment's liabilities in assessing segment performance and deciding how to allocate resources, segment profit or loss, assets and liabilities shall be reported at those measures. If the For assets classified according to a liquidity presentation, non-current assets are assets that include amounts expected to be recovered more than twelve months after the reporting period

chief operating decision maker uses more than one measure of an operating segment's profit or loss, the segment's assets or the segment's liabilities, the reported measures shall be those that management believes are determined in accordance with the measurement principles most consistent with those used in measuring the corresponding amounts in the entity's financial statements

An entity shall provide an explanation of the measurements of segment profit or loss, segment assets and segment liabilities for each reportable segment. At a minimum, an entity shall disclose the following the basis of accounting for any transactions between reportable segments

the nature of any differences between the measurements of the reportable segments' profits or losses and the entity's profit or loss before income tax expense or income and discontinued operations (if not apparent from the reconciliations described in paragraph 28). Those differences could include accounting policies and policies for allocation of centrally incurred costs that are necessary for an understanding of the reported segment information

the nature of any differences between the measurements of the reportable segments' assets and the entity's assets (if not apparent from the reconciliations described in paragraph 28). Those differences could include accounting policies and policies for allocation of jointly used assets that are necessary for an understanding of the reported segment information

صفحه       1        2    

 

ما را حمایت کنید:

کد +1 گوگل
فا تولز ، ابزار رایگان وبمسترکد امتیاز +1 در گوگل