Welcome to the staff training of AASA 8 Operating Segment!
AASB 8 applies to annual reporting period beginning on/after 1 Jan 2009 and supersedes AASB 114 Segment Reporting when adopted.
Operating Segments specifies the use of a ‘through the eyes of the management’ approach to an entity’s reporting of information relating to its operating segments in annual financial reports, and also requires an entity to report financial and descriptive information about its reportable segments.
AASB 8 is applicable to for-profit entities whose debt or equity securities are traded in a public market and to entities in the process of filing financial statements for the purpose of issuing such instruments.
An entity may comprise one or more operating segments. Individual operating segments may separately be reportable segments or they may be aggregated to form either a single segment or multiple reportable segments.
An entity may comprise one or more operating segments. Individual operating segments may separately be reportable segments or they may be aggregated to form either a single segment or multiple reportable segments. The size and extent of a reportable segment is determined by the aggregation criteria and quantitative thresholds. An ‘operating segment’ is a component of an entity:
a. that engages in business activities from which it may earn revenues and incur expenses b. whose operating results are regularly reviewed by the entity’s chief operating decision maker for resource allocation decision making purposes and performance assessment, and
c. for which discrete financial information is available.
An operating segment may sell primarily or exclusively to other operating segments of the business, or it may engage in business activities for which it has yet to earn revenues; e.g. start-up operations.
Two or more operating segments may be aggregated into a single reportable segment where they are similar in the following respects: • the nature of the products and services
• the nature of the production process
• the type or class of customer for the products/services
• the distribution methods relating to the products/services, and • the nature of regulatory environment.
For considering whether the amount of an entity should report the operating segment by separate segmentation that either: • reports the segment revenue if the segment revenue is 10 per cent or more the combined revenue of all operating segment. • reports the segment profit or loss if the segment profit or loss is 10 per cent or more the combined profit or loss of all operating segment. • reports the segment assets if the segment assets is 10 per cent or more the combined assets of all operating segment.
For the principle and element of the disclosure, an entity should disclose the segment information of the operating activities to enable the financial statement's users able to evaluate the nature, financial effects and economic environments of the business.
(a) general information
(b) the basis of measurement and information of segment specified revenues and expenses in segment profit or loss, segment assets and segment liabilities (c) reconciliation segment revenues, segment profit or loss, segment assets, segment liabilities and other material segment items to the total corresponding amounts
And also, we should consider the following general information is required for disclosure: 1. The factors of entity's segments be identified and reported, including the basis of organization, differences in products and services, geographical areas, regulatory environment around the entity and tje aggregation of operating segments. 2. The types of products and services of its segment revenue derived.
Additionally, an entity shall report:
a. A measure of profit or loss and total assets for each reportable segment. b. A measure of liabilities...