Chapter 9 - Operating Segments

Question 1

What standard covers reporting segments?

Answer 1

IFRS 8

Question 2

What standard covers non-current assets held for sale and discontinued operations?

Answer 2

IFRS 5

Question 3

What is a segment under IFRS 8?

Answer 3

Generally, a distinguishable component of the entity that is engaged in business activities which generate revenues and incur expenses.

Question 4

Who should apply IFRS 8?

Answer 4

Those entities whose equity and debt are publicly traded or are in the process of issuing equity or debt in public securities markets.

Question 5

If an entity covers both a parent and a group, is segment information for both required under IFRS 8?

Answer 5

No. Segment information is only required in relation to the group as a whole.

Question 6

For a segment to be considered reportable under IFRS 8, what size tests apply?

Answer 6

One of the following results in 10% or more:

1. Segment revenue as a percentage of all segment revenue
2. Segment profit or loss as a percentage of the greater of total segment profit (exclude any loss segments) or segment loss (exclude any profit segments).

Question 7

If a segment was separately reported in the previous period, should it be reported again if it fails the threshold test for the current period?

Answer 7

Yes, if identified as being on continuing significance.

Question 8

Under IFRS 8, what information should be provided for reportable segments?

Answer 8

• Disclosure of general information, such as the type of products / services for each segment
• Factors that have been used by management to identify its reportable segments
• Measure of profit or loss should be disclosed
• Assets and liabilities are only required to be disclosed if they are regularly provided to the chief operating decision maker

Question 9

When does IFRS apply for discontinued operations?

Answer 9

Disclosure is required when an entity discontinues a component of its activities - including before the component is discontinued.

Question 10

How should an entity present discontinued operations under IFRS 5?

Answer 10

• Profit and loss should display a single line for the discontinued operation
• Note disclosure should break down the revenue, expenses, pre-tax profit or loss
• Should also disclose the net cash flows attributable to operating, investing and financing activities of that operation.