operating segment based on ifrs--08.pptx

IFRS 8

1. IFRS 8 -Operating Segments

2. What is an operating segment? An operating segment is a component of an entity: that engages in business activities from which it may earn revenues and incur expenses; whose operating results are regularly reviewed by the entity’s CODM to make decisions about resources to be allocated to the segment and assess its performance; and for which discrete financial information is available.

3. Core principle An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

4. Application of IFRS - Individual Entities Who Needs to Apply This IFRS? 1. Individual Financial Statements: Entities with Publicly Traded Instruments: Applies to entities whose debt or equity instruments are traded on any public market (includes both domestic and international stock exchanges or over-the-counter markets). Entities Planning Public Offerings: If an entity is preparing to file or is currently filing its financial statements with a regulatory body (like a securities commission), aiming to issue any class of instruments in a public market, this IFRS must be applied.

5. Who Needs to Apply This IFRS? Application of IFRS - Consolidated Financial Statements Scope for Groups with a Parent Entity 1. Consolidated Financial Statements: Groups with Publicly Traded Instruments: This applies to groups where the parent company’s debt or equity instruments are traded on public markets, including local or regional markets. Groups Filing with Regulatory Organizations: Groups that are in the process of filing consolidated financial statements for the purpose of public issuance of any instruments must comply with this IFRS. 2. Important Note on Reporting: Only the consolidated financial statements need to include segment information when both consolidated and individual statements are presented.

6. Overview of Operating Segments According to IFRS An operating segment is a part of an entity: That conducts business activities from which it can earn revenues and incur expenses. Whose financial results are regularly reviewed by the chief decision-maker to assess performance and allocate resources. For which separate financial information is available.

7. Characteristics of Operating Segments

8. Inclusion and Exclusion in Operating Segments

9. How are operating segments identified? There are four key steps. Entities will need to: 1 Identify the CODM. 2 Identify their business activities (which may not necessarily earn revenue or incur expenses). 3 Determine whether discrete financial information is available for the business activities. 4 Determine whether that information is regularly reviewed by the CODM.

10. Role of the Chief Operating Decision Maker (CODM)

11. Reporting and Management of Operating Segments

12. Identifying Operating Segments in Complex Structures

13. Quantitative thresholds (IFRS 8 para 13) Information on an operating segment should be separately reported if: reported revenue (external and inter-segment) is 10% or more of the combined revenue of all operating segments; the absolute amount of the segment’s reported profit or loss is 10% or more of the greater of: the combined reported profit of all operating segments that did not report a loss, and the combined loss of all operating segments that reported a loss; the segment’s assets are 10% or more of the combined assets of all operating segments. Two or more operating segments may be combined (aggregated) and reported as one if certain conditions are satisfied

14. Profit or loss A B C D E F 50,000 -20,000 30,000 60,000 10,000 -50,000