Advanced FA II 1111111111111111111111111

accounting

1. CHAPTER 7 :
INTERIM& SEGMENTREPORTING

2. INTERIMFINANCIALREPORTING:
IAS 34

3. 3
IAS 34 –OVERVIEW
Objectiveandscope
Contentofaninterimfinancialreport
DisclosureinannualFS
Recognitionandmeasurement
Restatement ofpreviouslyreported
interimperiods

4. DEFINITIONOFTERMS
Interimperiod:isafinancialreportingperiod
shorterthanafullfinancialyear.
Interimfinancialreport:afinancialreport
containingeithera
completesetofFS(asdescribedinIAS1)
or
asetofcondensedFS(asdescribedinthis
Standard)foraninterimperiod.
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5. OVERVIEW
IAS34prescribesminimum contentofan
interimfinancialreport&theprinciplesfor
recognition&measurementincompleteor
condensedFSforaninterimperiod.
IAS 34 does NOT mandate which entities have to
publish interim financial reports, how frequently &
when –this is left to OTHER REGULATORS
(gov’ts, stock ex, securities regulators & Acct bodies.)
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6. 6
IAS 34 –OBJECTIVEANDSCOPE
Annual reporting
Often supplemented with interim or quarterly
reports
Interim reporting
Reports provide more relevant and timely
information
Oftenmandated bysecuritiesregulators,
governments,&stockexchanges
IASB encourages publicly trading Co. to provide
interim information
At least as of the end of the first half of the
year & issue it within 60 days of this date
Standard does not address how often nor how soon after
the period entities should produce interim reports

7. 7
IAS 34 –OBJECTIVEANDSCOPE
Choice by the entity!!!
May choose not to prepare interim FS at
all
IF you choose to prepare them in accordance
with IFRSs
IAS34 applies!!!
Defn:. . . a financial report containing
either a complete set of FS or a set of
condensed FS for an interim period

8. 8
IAS 34 –CONTENTOFANINTERIMFINANCIALREPORT
Goal of interim reporting
To provide info about new events &
circumstances and other changes
Not just replicate the information given
in the annual FS
The standard does not prohibitincluding a complete set
of FS

9. IAS 34 –CONTENTOFAN…
Min. requirements mandated by
IAS 34:
Min. components of an interim financial report
Form and content of interim FS
Selectedexplanatory notes
Disclosure of compliance with IFRSs
Periods for which interim FS are required to be
presented
Materiality
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10. 10
IAS 34 –CONTENTOFANINTERIMFINANCIALREPORT
1. Minimum components
Required condensedstatements
• Statement of financial position
• Statement of P/L & Other Comprehensive Income
-Presented as a single statement or a separate st. of P/L
plus a SOCI
• Statement of changes in equity
• Statement of cash flows
NB: Condensed FS shall include at min. each of the headings &
subtotals that were included in the most recent annual FS.
In addition, selected explanatory notes must accompany the
above

11. 11
IAS 34 –CONTENT OFANINTERIMFINANCIALREPORT
2. Form and content of interim FS
Ifthe entity presents a Complete set of
statements
Follow IAS 1 (presentation of FS)
If it presentscondensed statements
Entity must present at a minimum the headings &
subtotalsthat were presented in the annual FS.
Basic and diluted EPS
Presented when the entity is covered by IAS 33
Interim FS (Consolidation)
Based on CFS where the most recent ann. St.
were prepared on a consolidated basis
Additional Separate FSis a choice

12. 12
IAS 34 –CONTENT OFANINTERIMFIN. REPORT
3. Selected explanatory notes
Relevant notes unchanged from the annual report
Not included
Repetitive and Can obscure the new & more relevant info
Inf. is normally presented on a year-to-date basis
Material disclosures
• Statement that the accounting policies follows the
annual report
• Explanatory comments about the seasonality of the biz
• Any unusual items
• Nature and amount of changes in estimates

13. 13
IAS 34 –CONTENTOFANINTERIMFINANCIALREPORT
(continued list)
• Changes in debt and equity securities (issue,
repurchase, repayment)
• Dividends paid
• Segmented information including (IFRS8)
Intersegment revenues
Segment profit/loss
• Material subsequent non-adj. events (IAS10)
• Changes in contingent assets/liabilities
Disclosure of compliance with IFRSs
If the FS are prepared in compliance with IFRSs, this
should be stated and the interim statements must also be
in compliance with all IFRSs

14. 14
IAS 34 –CONTENTOFANINTERIMFINANCIALREPORT
4. Materiality
Discussed in IAS 1 and 8
Although there is no specific quantitative
guidance
IAS 34 notes that materiality for interim statements
should be assessed based on the interim period
Note that interim FS may have additional estimates
Therefore the numbers may be a bit softer

15. 15
IAS 34 –DISCLOSUREINANNUALFS
Situations may arise where estimates are changed in the
last quarter or final interim period
Where final interim period statements are not
separately presented and where the change is
significant
Nature and amount of change in estimate should be
disclosed in the annual FS
Requires disclosure of the nature and amount of
material changes in estimates

16. 16
IAS 34 –RECOGNITION ANDMEASUREMENT
Same accounting policies as annual
Entity is required to use the same accounting policies as
in the year-end statements
Encourages consistency
Where there has been a subsequent change in accounting
policies, the entity would use the newer policy
Discrete versus integral
The discreteapproach
Interim period as a separate and self-standingperiod
The integralapproach
Interim report as part of the annual period(i.e., as a portion of a
larger period)

17. 17
IAS 34 –RECOGNITION ANDMEASUREMENT
Revenues received seasonally, or occasionally
Recognized when they occuror are earned,
notwithstanding their cyclical or seasonal nature
May result in more revenues being recognized in one period
than in another
Reflects the underlying reality
Costs incurred unevenly during the fin.year
Costs are recognized when incurred
Only capitalized when they meet the definition of
an asset
NB: Such Treatment of Revenue & Expenses;
Supports the discrete approach

18. EXAMPLE: RECOGNITION OF COSTS
EX1:
Your PLC is retraining its entire staffto bring
them up to speed with IFRSs. The costs are
substantial& are incurred in the 1
st
quarter. It
would like to spread the costs over the year since they
will benefit the entire year.
RQD: Assuming that the entity prepares 1
st
quarter
statements, discuss the Issues.
10/1/2024
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19. OPERATINGSEGMENTS: IFRS 8

20. CONTENT
10/1/2024
20
Objective & Scope
OPERATING SEGMENTS
REPORTABLE SEGMENTS
DISLOSURES
MEASURMENT
ENTITY WIDE DISCLOSURES

21. 21
IFRS 8 –OBJECTIVEANDSCOPE
Purpose
Provide external users with a glimpse of how
management views its operations in terms of
resource allocation & performance measurements
Present information about the various business
& geographical segmentsof the entity so users can
better assess the risks and returns of each
segment
Ensure that sufficient information is disclosed to
allow users to evaluate the nature & financial
effects of the entity’s business & the economic
environment

22. IFRS 8: OBJECTIVE & SCOPE
Application
Separate as well as consolidated FS of Publicly trading
Companies (Listed Companies).
Entities that file or are in the process of filing financial
information with a securities regulator
Private companies may voluntarily adopt
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23. 23
IFRS 8 –OPERATINGSEGMENTS: MEANING
Operating segment
A component of an entity:
(a) That engages in business activities from w/c it
may earn revenues and incur expenses
(including revenues and expenses relating to Inter-
segment transactions),
(b) Whose operating results are regularly
reviewed by the entity’s chief operating decision
maker (CODM) to make decisions about resources
to be allocated to the segment & assess its
performance, and
(c) For which discrete financial informationis
available

24. 24
IFRS 8 –OPERATINGSEGMENTS
Three defining Cx:
1. They must engage in a business activity
• Head office function would likely not qualify
-Does not earn revenues from a sp. business
itself
-Supports the rest of the business
2. The op. results must be reviewed by senior
mgt for resource allocation & performance
evaluation
• Often the CEO or COO but it may be a group of
senior executives
• Op. segment usually has a segment manager
who manages the segment & reports to the CODM

25. … 3 DEFININGCX
3.Separate information must be available
• If not available, it is unlikely that the
segment will meet the first two criteria
• If it were a separate segment from a business
perspective, the entity should be managing it,
including capturing and assessing financial
information
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26. 26
IFRS 8 –REPORTABLESEGMENTS
Aggregation criteria
Where two or more op segments have similar
economic Cx, they may be combined for reporting
purposes
The entity reviews certain aspects when making
this assessment:
• Nature of products/services
• Nature of the production processes
• Type of customer • Distribution methods
• Nature of the regulatory env’t

27. 27
IFRS 8 –REPORTABLESEGMENTS
Quantitative thresholds
The entity reports only those op segments that exceed
a size test
The ff are quantitative thresholds:
1. Reported revenue is equal to or greater than
10% of the combined revenues of all op.
segments
-Includes intersegment sales

28. … QUANTITATIVETHRESHOLD
2. Absolute amt of P/Lis 10%or greater
than the higher of combined
profits/Losses
3. Assetsare equal to or greater than 10% of the
combined assets of all operating segments
If an operating segment meets any one of the above
criteria, it is reportable!!!
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29. 29
IFRS 8 –REPORTABLESEGMENTS
Quantitative thresholds
Next steps once mgt have identified the reporting segments
Assess whether additional segments shall
be reported
The test
Ifthetotalexternalrevenuesforthe
reportablesegmentsarelessthan75%ofthe
entity’srevenues,theentityidentifies
additionalreportablesegments
Minimum that is reported is 75%!!!

30. Once the 75% threshold has been met
Entity has identified sufficient reportable
segments
Rest of the non-reportablesegments are
added together under “other operating
segments” & disclosed
The entity presents comparatives, which include all
reportable segments
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… QUANTITATIVETHRESHOLD

31. 31
IFRS 8 –DISCLOSURE
The entity should present the ff categories of inf:
• General information
• Information about the reported segment’s P/L,
assets and liabilities, & bases of measurement
• Reconciliations of segment revenues to reported
revenues
General information
The ff general disclosures are required:
• Factors used to identifythe reportable segments
• Types of products/services

32. 32
IFRS 8 –DISCLOSURE
Information about P/L, and assets/liabilities
Must present the amount of P/L and total assets for
each reportable segment
Information is disclosed where it is regularly
presented to the CODM as follows:
• liabilities
• revenues (external and intersegment)
• depreciation and amortization
• material items of income and expense
• income tax expense income
• material non-cash items other than depn & amortization
• inv’t in associates/JV accounted for by the equity method
• additions to non-current assets

33. 33
IFRS 8 –MEASUREMENT
Reconciliations
Most users focus on the consolidated numbers
Required reconciliations b/n reportable segments &
FS numbers:
• Revenues
• Profit and loss
• Assets
• Liabilities (if liabilities are presented for the
segments)
• Any other material segments amounts presented
The entity should identify and describe material
reconciling items

34. IFRS 8 –ENTITY-WIDEDISCLOSURES
The basics
Info is developed unless the costs to produce it
are excessiveor the information is not available
Would be based on information used to
produce the entity’s FS
The ff are required to be disclosed by all
entities :
Information about products and services
Information about geographical areas
Information about major customers
•Information about products and services
• External revenues by product/service (or group)
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