CAF 7 – IFRS 8

IFRS 8 Operating Segments 03

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INTRODUCTION
Many companies operate in several different industries (or ‘product
markets’) or diversify their operations across several geographical
Background locations. A consequence of diversification is that companies are exposed
to different rates of profitability, different growth prospects and different
amounts of risk for each separate ‘segment’ of their operations.
IFRS 8 requires quoted companies to disclose information about their
different operating segments, in order to allow users of the financial
statements to gain a better understanding of the company’s financial
position and performance.

Users are able to use the information about the main segments of the
Objective
company’s operations to carry out ratio analysis, identify trends and make
predictions about the future.

Without segment information, good performance in some segments may

‘hide’ very poor performance in another segment, and the user of the
financial statements will not see the true position of the company.
Segment reporting is required for any entity whose debt or equity is quoted
on a public securities market (stock market) and also entities that are in the
Scope process of becoming quoted. If an entity includes some segment
information in the annual report that doesn’t comply with IFRS 8, it cannot
call it ‘segmental information.’

OPERATING SEGMENTS
IFRS 8 defines an operating segment as a component of an entity:
 that engages in business activities from which it earns revenues and
incurs expenses
Definition  whose operating results are regularly reviewed by the entity’s chief
operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance, and
 for which discrete financial information is available.
Not every part of an entity is necessarily an operating segment. For
example, a corporate head office may not earn revenue and would not be
an operating segment.
Explanation
The standard requires a segment to have its results reviewed by the chief
operating decision maker. The reason for this part of the definition of an
operating segment is to ensure that an entity reports segments that are
used by management of the entity to monitor the business.

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 CAF 7 – IFRS 8

Two or more operating segments may be aggregated into a single

operating segment if they have similar economic characteristics, and the
segments are similar in each of the following respects:
 The nature of the products and services
Aggregation
 The nature of the production process
of segments
Page | 2  The type or class of customer for their products and services
 The methods used to distribute their products or provide their
services, and
 If applicable, the nature of the regulatory environment, for example,
banking insurance or public utilities.
An entity must report separately information about an operating segment
that meets any of the following quantitative thresholds:
 Its reported revenue, including external sales and intersegment
sales is 10% or more of the combined internal and external revenue
Quantitative
of all operating segments
thresholds
 Its reported profit is 10% or more of the greater of the combined
(10%)
profit of all segments that did not report a loss and the combined
reporting loss of all segments that reported a loss
 Its assets are 10% or more of the combined assets of all operating
segments
If the total external revenue reported by operating segments constitutes
75% external
less than 75% of the entity’s total revenue, then additional operating
revenue
segments must be identified as reporting segments, even if they do not
criteria
meet the criteria, until 75% of revenue is included in reportable segments.
An entity must report separately information about each operating segment
that:
Reportable
 Has been identified in accordance with the definition of an operating
segments
segment shown above;
 is aggregated with another segment; or
 exceeds the quantitative thresholds.

Latest update: March 2020

 CAF 7 – IFRS 8

DISCLOSURES
IFRS 8 states that an entity must disclose information so that users of the financial
statements can evaluate the nature and financial effects of the business activities in which it
engages and the economic environments in which it operates.
 A measure of profit or loss for each reportable segment
Page | 3
 A measure of total assets and liabilities for each reportable
Measures
segment if such an amount is reported regularly to the chief
operating decision maker
Information about the following items if they are specified and included in
the measure of segment profit that is reported to the chief operating
decision maker:
 revenues from external customers
 revenues from transactions with other operating segments of the
Items if they same entity
are reported to  interest revenue
chief operating  interest expense
decision maker  depreciation and amortisation
 material items of income and expense in accordance with IAS 1
 the entity’s interest in the profit or loss of associates and joint
ventures accounted for by the equity method
 income tax expense or income
 material non-cash items other than depreciation and amortisation.
The amount of investment in associates and joint ventures accounted for
by the equity method and the amounts of additions to non-current assets
Non-current
(excluding financial instruments, deferred tax assets, post-employment
assets
benefit assets and rights arising under insurance contracts), provided that
these amounts are included in segment assets.
Additionally, the following reconciliations are required:
 Reconciliation of the totals of segment revenues to the entity’s
revenue;
 Reconciliation of the total of reported segment profits or losses to
the entity’s profit before tax and discontinued operations;
 Reconciliation of the total of the assets of the reportable segments
Reconciliations
to the entity’s assets;
 Reconciliation of the total of the liabilities of the reportable
segments to the entity’s liabilities (but only if segment liabilities are
reported); and
 Reconciliation of the total of the assets of the other material items
to the entity’s corresponding items.
Also, the factors used to identify the entity’s reportable segments,
Factors for
including the basis of organisation, (i.e. whether the entity is organised
identifying
around different products and services or geographical area), and the
reportable
types of products and service from which the reportable segments derive
segments
their income must all be disclosed.

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 CAF 7 – IFRS 8

MEASUREMENT
IFRS 8 requires that the amount of each segment item reported shall be the measure
reported to the chief operating decision maker for the purposes of making decisions about
allocating resources to the segment and assessing its performance. This is based on the
internal structure of how division of the entity report their results to the chief operating
Page | 4 decision maker.

Any adjustments and eliminations made in preparing an entity’s financial statements shall be
included in determining segment results only if they are included in the measure of the
segment’s results used by the chief operating decision maker.

The minimum the entity must disclose is:

 The basis of accounting for any transactions between reportable segments
 The nature of any differences between the measurement of the reportable segments’
profit or loss before tax and the entity’s profit or loss, for example, the allocation of
centrally incurred costs.
 The nature of any differences between the measurement of the reportable segments’
assets and the assets of the entity.
 The nature of any differences between the measurement of the reportable segments’
liabilities and the liabilities of the entity.
 The nature of any changes from prior periods in measurement methods used to
determine segment profit or loss and the effect on profit or loss from those changes.
 The nature of asymmetrical allocations to reportable segments. For example, a
reportable segment may be charged the depreciation expense for a particular asset
but the related depreciable asset might not have been allocated to the segment.

ENTITY WIDE DISCLOSURES

The reporting entity must also make the following disclosures in the financial statements,
even if it only has one reportable segment:
 Revenue from external customers for each product and service or each group of
similar products and services.
 Revenue from external customers attributed to the entity’s country of domicile and
attributed to all foreign countries in total where revenue is made.
 Non-current assets located in the country of domicile and located in all foreign
countries in total where the entity holds assets
 If revenue from any customer is more than 10% of total revenue then it must be
disclosed along with the total of revenues from these customers and the identity of
the segment reporting the revenue.

Latest update: March 2020

 CAF 7 – IFRS 8

SYLLABUS

Reference Content/Learning outcome

C2 IFRS 8 Operating Segment

Understand and apply disclosure requirement about operating segments as per Page | 5
LO3.2.1
IFRS 8
Proficiency level: 2
Testing level: 1

Past Paper Analysis

A14 S15 A15 S16 A16 S17 A17 S18 A18 S19 A19 S20
07 -
Objective Type - 01

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 CAF 7 – IFRS 8

PRACTICE Q&A
Sr.# Description Marks Reference
PRACTICE QUESTIONS
1C Identify reportable segments – profit or loss threshold 05 ST
Page | 6 2H Identify reportable segments – multiple thresholds 06 ST
3H Shahzad Industries Limited: Theoretical 13 QB
4H AZ: Theoretical 08 QB
5C Gohar Limited: Reportable segments and disclosures 13 QB
6H Jay Limited: Theory and reportable segments 08 QB
7C Diamond Limited: Identify reportable segments 07 PE A19

Latest update: March 2020

 CAF 7 – IFRS 8

QUESTION 01
The following information relates to a quoted company with five divisions of operation:
Profit Loss
Rs.m Rs.m
Division 1 10 -
Division 2 25 -
Division 3 - 40 Page | 7
Division 4 35 -
Division 5 40 -
110 40

Which of the divisions are reportable segments under IFRS 8 Operating segments? (05)

QUESTION 02
The following information relates to Oakwood, a quoted company with five divisions of
operation:
Wood Furniture Veneer Waste Other
Total
sales sales sales sales sales
Rs.m Rs.m Rs.m Rs.m Rs.m Rs.m
Revenue - external customers 220 256 62 55 57 650
Inter segment revenue 38 2 - 5 3 48
Reported profit 54 45 12 9 10 130
Total assets 4,900 4,100 200 400 600 10,200

Which of the business divisions are reportable segments under IFRS 8 Operating
segments? (06)

QUESTION 03
Shazad Industries Ltd has recently acquired four large subsidiaries. These subsidiaries
manufacture products which are of different lines from those of the parent company. The
parent company manufactures plastics and related products whereas the subsidiaries
manufacture the following:
Product Location
Subsidiary 1 Textiles Karachi
Subsidiary 2 Car products Lahore
Subsidiary 3 Fashion garments Peshawar
Subsidiary 4 Furniture items Multan

The directors have purchased these subsidiaries in order to diversify their product base but
do not have any knowledge of the information required in the financial statements regarding
these subsidiaries other than the statutory requirements.

Required
(a) Explain to the directors the purpose of segmental reporting of financial information.
(b) Explain to the directors the criteria which should be used to identify the separate
reportable segments. (You should illustrate your answer by reference to the above
information)
(c) Critically evaluate IFRS 8, Operating segments, setting out any problems with the
standard. (03 + 05 +05)

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 CAF 7 – IFRS 8

QUESTION 04
For enterprises that are engaged in different businesses with differing risks ad opportunities,
the usefulness of financial information concerning these enterprises is greatly enhanced if it
is supplemented by information on individual business segments.
Required
Page | 8 (i) Explain why the information content of financial statements is improved by the
inclusion of segmental data on individual business segments. (04)
(ii) Discuss how IFRS 8 requires that segments be analysed. (04)

QUESTION 05
Gohar Limited (GL), a listed company, is engaged in chemicals, soda ash, polyester, paints
and pharma businesses. Results of each business segment for the year ended 31 March
2015 are as follows:
Gross Operating
Business Sales Assets Liabilities
profit expenses
segments
------------------------- Rs. in million -------------------------
Chemicals 1,790 1,101 63 637 442
Soda Ash 216 117 57 444 355
Polyester 227 48 23 115 94
Paints 247 26 16 127 108
Pharma 252 31 12 132 98

Inter-segment sale by Chemicals to Polyester and Soda Ash is Rs. 28 million and Rs. 10
million respectively at a contribution margin of 30%.
Operating expenses include GL’s head office expenses amounting to Rs. 75 million which
have not been allocated to any segment. Furthermore, assets and liabilities amounting to
Rs. 150 million and Rs. 27 million have not been reported in the assets and liabilities of any
segment.
Required:
In accordance with the requirements of International Financial Reporting Standards:
(a) determine the reportable segments of Gohar Limited; (05)
(b) Show how these reportable segments and the necessary reconciliation would be
disclosed in GL’s financial statements for the year ended 31 March 2015. (08)

QUESTION 06
(a) Specify the criteria for identification of operating segments, in accordance with the
International Financial Reporting Standards. (03)
(b) Jay Limited is an integrated manufacturing company with five operating segments.
Following information pertains to the year ended 31 March 2012:
Internal External Total Profit /
Operating revenue revenue revenue (loss)
Assets Liabilities
segments -----------------------------Rs. in million------------------------
A 38 705 743 194 200 130
B – 82 82 (22) 44 40
C - 300 300 81 206 125
D 35 – 35 10 75 60
E 38 90 128 (63) 50 25
Total 111 1,177 1,288 200 575 380

Required: (ICAP CFAP Summer 12)

In respect of each operating segment explain whether it is a reportable segment. (08)

Latest update: March 2020

 CAF 7 – IFRS 8

QUESTION 07
Diamond Limited, a listed company, has six operating segments. These segments do not
have similar economic characteristics. Following segment wise information is available:
Revenue Total
Profit/(loss)
Segments External Inter-segment Total assets
---------------------------------Rs. in ‘000 ---------------------------------
Page | 9
A - 24,000 24,000 (1,800) 5,400
B 184,000 8,000 192,000 (12,000) 48,000
C 22,000 4,500 26,500 19,000 4,500
D 24,000 - 24,000 (23,200) 6,000
E 23,000 - 23,000 2,300 6,500
F 25,000 3,000 28,000 2,900 18,000
278,000 39,500 317,500 (12,800) 88,400

Required:
Identify the reportable segments under IFRSs along with brief justification. (07)

ICAP OBJECTIVE BASED QUESTIONS

01. Operating segment information should:
(i) increase the number of reported segments and provide more information
(ii) enable users to see an undertaking through the eyes of management
(iii) enable an undertaking to provide timely segment information for external interim reporting
with relatively low incremental cost
(iv) enhance consistency with the management discussion and analysis or other annual report
disclosures
(v) provide various measures of segment performance
(vi) provide information about reduced staff
(a) (i) to (iii) only
(b) (i) to (vi) all
(c) (i) to (iv) only
(d) (i) to (v) only

02. An operating segment is a component of an undertaking

(i) that engages in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the
same undertaking)
(ii) whose operating results are regularly reviewed by the undertaking’s chief operating
decision maker to make decisions about resources to be allocated to the segment and
assess its performance
(iii) for which discrete financial information is available
(iv) which is taxed separately from other components
(a) (i) to (ii) only
(b) (i) to (iii) only
(c) (i) to (iv) all
(d) (i), (ii) and (iv)

03. A component of an undertaking that sells primarily or exclusively to other operating segments of
the undertaking.
(a) It must be classed as an operating segment
(b) It must be excluded from being an operating segment
(c) It is included as an operating segment if the undertaking is managed that way
(d) It is included as an operating segment if the management so desires

04. IFRS 8 shall apply to

(i) listed companies

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 CAF 7 – IFRS 8

(ii) any company reporting under IFRS that wishes to provide the information
(iii) all other companies reporting under IFRS
(a) (i) to (ii) only
(b) (i) to (iii) all
(c) (i) only
(d) (ii) only
Page | 10 05. An operating segment may engage in business activities for which it has yet to earn revenues,
for example, start-up operations and it:
(a) will be reportable segment before earning revenues
(b) may be reportable segment before earning revenues
(c) will not be reportable segment before earning revenues
(d) None of above

06. Head office expenses:

(a) can be allocated to segments on a reasonable basis
(b) must not be allocated to segments
(c) must be allocated to segments based on their turnover
(d) must be allocated to segments based on their profit before tax

07. Two or more operating segments may be aggregated into a single operating segment if
aggregation is consistent with the core principle of IFRS 8, the segments have similar economic
characteristics, and the segments are similar in each of the following respects:
(i) the nature of the products and services
(ii) the nature of the production processes
(iii) the type or class of client for their products and services
(iv) the methods used to distribute their products or provide their services
(v) if applicable, the nature of the regulatory environment, for example, banking, insurance
or public utilities
(vi) staff numbers
(a) (i) to (vi) all
(b) (i) to (iii) only
(c) (i) to (iv) only
(d) (i) to (v) only

Latest update: March 2020

 CAF 7 – IFRS 8

ANSWER 01
Since Profit figure is higher, we will take 10% of that amount.
Reportable segment
Profit Loss
results > Rs. 11m
Rs.m Rs.m
Division 1 10 - No
Division 2 25 - Yes Page | 11
Division 3 - 40 Yes
Division 4 35 - Yes
Division 5 40 - Yes
110 40

Greater of the two 110

Materiality threshold (10%) 11
Note: Division 3 is reportable as the loss of Rs. 40m is greater than Rs. 11m (ignoring
the sign).

ANSWER 02
IFRS 8 states that a segment is reportable if it meets any of the following criteria:
1. its internal and external revenue is more than 10% of the total entity internal and
external revenue.
2. its reported profit is 10% or more of the greater of the combined profit of all segments
that did not report a loss.
3. its assets are 10% or more of the combined assets of all operating segments.

From the table above, only the Wood and Furniture department sales have more than 10%
of revenue, assets and profit and meet the requirements for an operating segment. The
other three divisions do not meet the criteria: none of them pass the 10% test for assets,
profit or revenue.

Additionally, IFRS 8 states that if total external revenue reported by operating segments
constitutes less than 75% of the entity’s revenue then additional operating segments must
be identified as reporting segments, until 75% of revenue is included in reportable segments

The total external revenue of Wood and Furniture is Rs.476m and the total entity revenue is
Rs.650m, which means that the revenue covered by reporting these two segments is only
73%. This does not meet the criteria, so we must add another operating segment to be able
to report on 75% of revenue. It doesn’t matter that any of the other entities do not meet the
original segment criteria.

In this case, we can add on any of the other segments to achieve the 75% target. If we add
in Veneer sales, this gives total sales of Rs.538m, which is 83% of the sales revenue of
Rs.650m. This is satisfactory for the segmental report.

ANSWER 03
Part (a)
The purposes of segmental information are:
(i) to provide users of financial statements with sufficient details for them to be able to
appreciate the different rates of profitability, different opportunities for growth and
different degrees of risk that apply to an entity’s classes of business and various
geographical locations.
(ii) to appreciate more thoroughly the results and financial position of the entity by
permitting a better understanding of the entity’s past performance and thus a better
assessment of its future prospects.

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 CAF 7 – IFRS 8

(iii) to create awareness of the impact that changes in significant components of a

business may have on the business as a whole.

Part (b)
IFRS 8 defines an operating segment as a component of an entity:
 that engages in business activities from which it may earn revenues and incur
Page | 12 expenses (including revenues and expenses relating to transactions with other
components of the same entity).
 whose operating results are regularly reviewed by the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment
and assess its performance.
 for which discrete financial information is available.

In order to identify the separate reportable segments, the following criteria should be
adopted:
(i) The reported revenue of the segment in Shazad Industries Ltd, including both sales
to external customers and inter-segment sales, is ten percent or more of the
combined revenue of its four operating segments.
(ii) The Assets of the segment in Shazad Industries Ltd are ten percent or more of the
combined assets of its four operating segments.
(iii) The reported profit or loss of the segment in Shazad Industries Ltd should be ten
percent or more of the greater, in absolute amount, of:
 the combined reported profit of all its operating segments that did not report a
loss and
 the combined reported loss of all operating segments that reported losses.

Part (c)
IFRS 8 lays down some very broad and inclusive criteria for reporting segments. Unlike
earlier attempts to define segments in more quantitative terms, segments are defined largely
in terms of the breakdown and analysis used by management. This is, potentially, a very
powerful method of ensuring that preparers provide useful segmental information.

There will still be problems in deciding which segments to report, if only because
management may still attempt to reduce the amount of commercially sensitive information
that they produce.

The growing use of executive information systems and data management within businesses
makes it easier to generate reports on an ad hoc basis. It would be relatively easy to provide
management with a very basic set of internal reports and analyses and leave the individual
managers to prepare their own more detailed information using the interrogation software
provided by the system.

If such analyses become routine then they would be reportable under IFRS 8, but that would
be very difficult to check and audit.

There are problems in the measurement of segmental performance if the segments trade
with each other. Disclosure of details of inter-segment pricing policy is often considered to be
detrimental to the good of a company. There is little guidance on the policy for transfer
pricing.

Different internal reporting structures could lead to inconsistent and incompatible segmental
reports, even from companies in the same industry.

Latest update: March 2020

 CAF 7 – IFRS 8

ANSWER 04
Part (i) Usefulness of segmental data
Many entities carry out several classes of business and operate in a number of countries
across the world. Each of these businesses and geographical segments carries with it
different opportunities for growth, different rates of profit and varying degrees of risk. Some
business segments may be strongly influenced by the health of the economy whereas other
segments may be unaffected by recession. One country may be experiencing growth; Page | 13
another country may be less stable because of political events. Awareness of these cultural
and environmental differences is important to investors in order to allow them to fully
understand the performance and position of the entity over the past, its prospects for the
future and the risks that it faces.

IFRS 8 requires that segmental information should be provided to enable investors to

understand the impact that the different segments of a business may have on the business
as a whole. If the user of financial statements is only provided with figures for the entity as a
whole, this might hide the risks and problems or profits and opportunities of the underlying
business segments. The disaggregated financial information provided by segmental
reporting allows for analytical review on a segment by segment basis which will provide
greater understanding of the entity’s position and performance and allow a better
assessment of its future.

Part (ii) Analysing segments

IFRS 8 defines an operating segment as a component of an entity that engages in business
activities from which it may earn revenues and incur expenses, whose operating results are
reviewed regularly by the chief operating decision maker in the entity and for which discrete
financial information is available.

Not every part of a business is necessarily an operating segment or part of an operating

segment. Head office is an example, since head office does not usually earn revenues.
Generally, an operating segment has a segment manager who is directly accountable to and
maintains regular contact with the chief operating decision-maker, to discuss the
performance of the segment.

IFRS 8 requires that entities should report information about each operating segment that is
identified and that exceeds certain quantitative thresholds for size of revenue, operating
profit or loss or assets. Financial information about operating segments with similar
characteristics can be aggregated.

IFRS 8 sets out the information about each reportable operating segment that should be
disclosed, including total assets, profit or loss, revenue from external customers, revenue
from sales to other segments, interest income and expense, depreciation, material items of
income or expense and tax. The amount reported for each item should be the same
measure that is reported for the segment to the chief operating decision maker of the entity.
IFRS8 applies to quoted companies only.

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 CAF 7 – IFRS 8

ANSWER 05
Part (a)
Determination of reportable segments
Chemicals Soda Ash Polyester Paint Pharma Total
-------------------------- Rs. in million --------------------------
Sales 1,790 216 227 247 252 2,732
Page | 14
Less: Inter-segment sales (38) - - - - (38)
Sales to external customers 1,752 216 227 247 252 2,694
Gross profit 1,101 117 48 26 31 1,323
Operating expenses (63) (57) (23) (16) (12) (171)
Profit before tax 1,038 60 25 10 19 1,152
Assets 637 444 115 127 132 1,455

Criteria for reporting segment Reporting segment of External sales

identification identified segment identifying
1. 10% of sales i.e. Rs. 273.2 million Chemicals 65.03%
2. 10% of PBT i.e. 115.2 million Chemicals -
3. 10% of assets i.e. 145.5 million Chemicals / Soda Ash 8.02%

Further segment needs to be identified as reportable segment’s external sale is less

3. Highest in term of sales and % of assets Pharma 9.35%
amount remaining segments
Total 82.40%

Part (b)
Disclosure in the financial statements of Gohar Limited – Operating segment results
Pharma Polyester &
Chemicals Soda Ash Total
Paint
-------------------------- Rs. in million --------------------------
Revenue from external customers 1,752 216 252 474 2,694
Inter segment revenue 38 - - - 38
Revenue from reportable segment 1,790 216 252 474 2,258
Other material information
Operating expenses 63 57 12 39 171
Segment profit before tax 1,038 60 19 35 1,152
Segment assets 637 444 132 242 1,455
Segment liabilities 442 355 98 202 1,097

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities

Other than
Reportable Elimination of Gohar
reportable Other
segment intersegment Limited's
segment adjustments
total transactions total
total
------------------------------ Rs. in million ------------------------------
Revenues 2,258 474 (38) - 2,694
Operating expenses 132 39 – 75 246
Segment profit before tax 1,117 35 (11) (75) 1,066
Segment assets 1,213 242 – 150 1,605
Segment liabilities 895 202 - 27 1,124

The reconciling items represents amounts related to corporate headquarter which are not
included in segment information.

Latest update: March 2020

 CAF 7 – IFRS 8

ANSWER 06
Part (a) An operating segment is a component of an entity:
 That engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other
components of the same entity);
 Whose operating results are regularly reviewed by the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment Page | 15
and assess the performance; and
 For which discrete financial information is available.

A business activity which has yet to earn revenues, such as a start-up, is an operating
segment if it is separately reported on to the chief operating decision maker.

Part (b)
As Jay Limited has both profit and loss making segments, the result of those in profit and
those in loss must be totaled to see which is the greater:
Profits (194+81+10) 285
Losses (22+63) (85)
200
So, the 10% of profit or loss test must be applied by reference to Rs. 285 million.

Reportable
Segment Explanation
(Yes / No)
A Yes Because it generates more than 10% of revenue.
B No Because it fails to meet any of the criteria specified in IFRS-8
C Yes Because it generates more than 10% of revenue.
D Yes Because it has more than 10% of assets.
E Yes Because its losses are more than 10% of absolute profit.
Check the 75% test is satisfied: (705+300+90)/1,177 = 93%

ANSWER 07
10% Threshold (Reason(s)) % of
Combined revenue Profit / Loss* Total assets external
Segment revenue if
317,500 x 10% 37,000 x 10% 88,400 x 10%
= 31,750 = Rs. 3,700 = 8,840 reportable
A Not Reportable: Fails to meet any of the criteria. -
B Reportable: Meets all three of the criteria. 66.18%
C Reportable: its profit of Rs. 19,000 is greater than Rs. 3,700 7.91%
D Reportable: its loss of Rs. 23,200 is greater than Rs. 3,700 8.63%
E Not Reportable: Fails to meet any of the criteria. -
F Reportable: its assets of Rs. 18,000 are greater than Rs. 8,840 8.99%
91.71%
*Total loss (excluding segments which reported profit)
= Rs. 1,800 + 12,000 + 23,200 = Rs. 37,000

OBJECTIVE BASED ANSWERS

01. (d) Information about reduced staff is not required by IFRS 8
02. (b) Taxation is not criteria for defining operating segment
03. (c) It may be included if entity is so managed (not based on desire).
04. (c) IFRS 8 is applicable to listed companies only.
05. (b) It may be reportable segment if it meets the criteria.
06. (a) These can be allocated on reasonable basis.
07. (d) Staff number is not the factor to combine two or more segments.

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