Chapter 9: Segment Reporting

Question 1

Operating segment is defined as (3 sections)

Answer 1

1. It engages in business activities from which it may earn revenues and incur expenses
2. Its operating results are regularly reviewed by the entity’s chief operating decision maker to allocate resources to the segment and assess its performance
3. Discrete financial information is available for it

Question 2

4 types of threshold tests

Answer 2

1. Revenue tes
2. Profit test
3. Asset test
4. 75% rule

Question 3

When does IFRS 8 require separate disclosures for segments

Answer 3

when 1 or more of the threshold tests are met

Question 4

Revenue test

Answer 4

Reported revenue, both external and intersegment, is 10% or more of the combined revenue (internal and external) of all segments

Question 5

Profit test

Answer 5

the absolute amount of profit (or loss) is 10% or more of whichever is greater (in absolute amount):
1. Combined reported profit of all segments that reported a profit
1. Combined reported loss of all segments that reported a loss

Question 6

Asset test

Answer 6

the assets are 10% or more of all the combined assets of all operating segments

Question 7

75% rule

Answer 7

If the total external revenue reported by operating segments is less than 75% of the company’s revenue, additional segments must be reported (even if they do not meet the above quantitative threshold) until 75% of revenue is reported in reportable segments

Question 8

Disclosure requirements for reportable segments

Answer 8

1. Factors used by management to identify segments
2. Types of products and services that generate revenue
3. A measure of profit (loss)
4. Total assets
5. Liabilities for each reportable segment if such amounts are regularly provided to the chief oeprating decision maker