14 - IFRS 8 - Operating Segments

These flashcards cover key concepts from IFRS 8, including definitions, reporting requirements, and segment disclosures.

What is the purpose of IFRS 8 regarding operating segments?

To disclose information that enables users to evaluate the nature and financial effects of business activities.

Who is required to disclose segment information under IFRS 8?

Only entities whose equity or debt securities are publicly traded or in the process of listing.

What defines an operating segment according to IFRS 8?

A component that engages in business activities, earns revenues, incurs expenses, and has its operating results reviewed by the chief decision maker.

How can operating segments be categorized?

They can be broken up geographically, by product category, or in another appropriate manner.

What is the minimum revenue percentage for a segment to be reportable?

Segment revenue must be at least 10% of total revenue.

What must the combined external revenue of reportable segments account for?

At least 75% of the total external revenue must be reported.

What are the main categories of disclosures required by IFRS 8?

1. General information 2. Profit/loss, assets, liabilities 3. Reconciliations 4. Entity-wide disclosures.

What types of items are disclosed for each operating segment?

Segment revenue, interest revenue, depreciation, material income/expenses, profit/loss from associates, and total assets/liabilities.

What are the conditions for aggregating operating segments?

Two or more segments can be aggregated if they have similar economic characteristics.

What is a criterion for a segment to be considered reportable based on profit?

Segment profit or loss must be at least 10% of the profit of all segments in profit.

What does the entity need to disclose for reconciliations under IFRS 8?

Reconciliations of segment revenues, reported segment profit/loss, segment assets, and segment liabilities.

What is required under entity-wide disclosures?

Revenue by product/service, geographical areas, and major customer information.

What is the significance of discrete financial information in defining an operating segment?

It allows the entity to assess performance and resource allocation.

How does IFRS 8 differentiate between profit and loss reporting?

It distinguishes between operating results reviewed by management and overall financial performance.

What information needs to be disclosed regarding major customers?

The extent of reliance on a single customer and the revenue amount from each major customer.

What is the role of the chief operating decision maker?

To regularly review the operating results of segments to allocate resources and assess performance.

Under IFRS 8, what is required for segment liabilities?

The total liabilities for each reportable segment must be disclosed.

When can a segment be aggregated with others?

If segments share similar economic characteristics.

What must be included in the general information disclosures?

Factors used to identify reportable segments and types of products/services for revenue.

What does segment revenue include?

Revenue from external customers and from other segments.

What is the threshold for a segment to be reportable based on assets?

Segment assets must be at least 10% of total assets.

What type of information is vital for evaluating economic environments under IFRS 8?

Segment financial performance and business activities.

What is meant by the term 'segment profit or loss'?

It is the profit or loss generated by the operating segment during the reporting period.

How does IFRS 8 ensure transparency in financial statements?

By requiring detailed disclosures about operating segments.

What must the entity disclose regarding interest in associates?

The entity's interest in profit or loss of associates and joint ventures accounted for using the equity method.

What is the impact of having segments with different geographic locations?

It allows analysis of financial performance relative to geographical markets.

What must be evaluated to determine the need for additional segments?

Whether existing segments meet the 75% revenue reporting threshold.

What is the implication of segment liabilities reporting?

It helps stakeholders assess the financial obligations associated with operating segments.

How does IFRS 8 affect decision-making within an organization?

It provides leaders with detailed performance insights to support resource allocation.