Operating Segments – Ifrs 8
Upcoming SlideShare
Loading in...5

Like this? Share it with your network


Operating Segments – Ifrs 8






Total Views
Views on SlideShare
Embed Views



2 Embeds 3

http://www.slideshare.net 2
http://www.apurva.com 1



Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

Operating Segments – Ifrs 8 Presentation Transcript

  • 1. Operating Segments – IFRS 8
    Effective date 1st January 2009
  • 2. Objective
    The reader of financial statements should understand the nature and financial effects of various activities of the company.
  • 3. What are Operating/Reporting segments?
    • These are components of a business
    • 4. Separate financial information should be available for these components
  • More features on segments
    • A segment depends on internal management reporting pattern
    • 5. Segments are reported in terms of products, services, regions, major customers etc.
    • 6. The chief decision makers review segments for performance and allocation of funds.
  • Similar segments
    • When segments are similar then we can combine two or more segments into one segment
    • 7. Such similarities should be in terms of
    • 8. Products
    • 9. Services
    • 10. Customers
    • 11. Distribution process
    • 12. Regulatory environment (Banking, Insurance etc)
  • Tests to recognize a segment
    If the segment has:
    10% or more of combined revenue
    10% or more of combined profit or loss
    10% or more of combined assets
    If not any of the above but management wants a segment to be reported
    If a segment was reported last year does not satisfy the criteria this year- include the segment
    If a segment is reported this year but was not present last year - include it for previous year’s comparison
  • 13. Total threshold
    If after segmentation, total segmental revenue, operating costs, assets, liabilities do not reach 75% each of the company total, then additional segments should be reported to reach the 75% level.
    As a reconciling item, group all other segments.
  • 14. Disclosures 1
    Disclose the following segmental information:
    • Operating revenue
    • 15. Operating costs
    • 16. Assets
    • 17. Liabilities
    • 18. Reconcile all the above to the totals on the financial statements
  • Disclosures 2
    Further segmental disclosures will be as follows:
    • Revenue from customers
    • 19. Inter departmental revenues
    • 20. Interest revenue
    • 21. Interest expense
    • 22. Depreciation and amortization
    • 23. Other material items (as per paragraph 97 of IAS 1)
    • 24. Equity method of accounting of associates and joint ventures (amount of investments)
    • 25. Other non cash items
    • 26. Additions to fixed assets (non financial instruments).
  • Measurements
    • Allocate all assets, liabilities, profit / losses on a reasonable basis
    • 27. Please ensure consistency
    • 28. As an explanation as to how we have measured a segment, disclose the basis of accounting (such as accrual basis)
    • 29. Explain if there is any difference of measurements between the segments and the company. These differences could be for accounting policies, centrally incurred costs etc.
  • Reconciliations
    There should be reconciliations between segmental totals and the company totals for the following:
    Net profit (before tax or discontinued operations)
    Material items
  • 30. Re-statement of information
    If the company structure changes then restate the earlier periods
    Following a change, disclose whether earlier information is restated
    If earlier information is not restated, then disclose the current segment information in the old and new format.
    This information should be provided unless the information is not available or the cost to produce it is prohibitive.
  • 31. Other disclosures
    • If information is not provided segment-wise then disclose revenue per product
    • 32. Disclose revenue from external customers separating between the country of domicile and foreign countries (if substantial)
    • 33. The extent of reliance on major customers (such as if 10% of revenue is earned from one customer)
    • 34. For group companies under common control, consider as one customer.
  • Effective date and application
    • The standard is applicable effective 1st January 2009
    • 35. Segmental information is required for interim financial statements also.