PFRS 8 - OPERATING SEGMENTS
Core Principle
 An entity shall disclose information to enable
users of financial statements to evaluate the
nature and financial effects of the business
activities in which it engages and the economic
environment in which it operates.
Segment Reporting
Is the disclosure of certain financial information
about the products and services an entity produces and
the geographical areas in which an entity operates
Operating Segment
Generally thought as a distinguishable
component of an entity that is engaged in business
activities which generates revenue and incur expenses
An operating segment is a component of an entity :
 That engages in business activities from which it
may earn revenue and incur expenses.
 Whose operating results are regularly reviewed
by the entity’ chief operating decision maker to
make decision about resources to be allocated to
the segment and asses its performance.
 And for which discrete financial information is
available.
Scope
IFRS 8 applies to the separate or individual
financial statements of an entity, and to the consolidated
financial statements of a group with a parent:
 whose debt or equity instruments are traded in a
public market.
 That files, or is in the process of filing, its
(consolidated) financial statements with a
securities commission or other regulatory
organization for the purpose of issuing any class
of instruments in a public market.
However, when both separate and consolidated
financial statements for the parent are presented in a
single financial report, segment information need be
presented only on the basis of the consolidated financial
statements.
Chief Operating Decision Maker (CODM)
 CODM is a function, not a designation
 CODM can be individual or a group of
individuals.
Ex: Entity’s chief executive officer, Chief
operating officer and Group of executive
directors
Chief Operating Decision Maker
 Allocates the resources of the entity
 Asses the performance of the Operating
Segments of the Entity
Management Approach
 Used in identifying operating segments
 Operating segments are identified on the basis of
internal reports about components of an entity
that are regularly reviewed by the Chief
Operating Decision Maker in order to allocate
resources to the segment and to assess its
performance
Reportable Operating Segments
PFRS 8 requires an entity to report financial and
descriptive information about its reportable segments.
Reportable segments are operating segments or
aggregations of operating segments that meet specified
criteria:
 Its reported revenue, from both external
customers and intersegment sales or transfers, is
10 per cent or more of the combined revenue,
internal and external, of all operating segments,
or
 The absolute measure of its reported profit or
loss is 10 per cent or more of the greater, in
absolute amount, of
o The combined reported profit of all
operating segments that did not report a loss
and
o The combined reported loss of all operating
segments that reported a loss, or
 Its assets are 10 per cent or more of the
combined assets of all operating segments.
Aggregation criteria
 Aggregation is consistent with the core principle
  Segment have similar economic characteristics
 Segments similar on each of the Five Specified
Criteria:
o Nature of products or services
o Nature of production process
o Type or class of customers
o Marketing method or the method used to
distribute the product
o The nature of the regulatory environment
 An entity shall disclose a measure of profit or
loss under all circumstances

Information to be Disclosed for each Segment

An entity shall disclose the following for each

reportable operating segment:

 General information about the operating

segment
 Information about profit or loss
 Information about segment assets and segment
liabilities and the basis of measurement
 Reconciliation of the totals of segment revenue,
segment profit or loss, segment assets, segment
liabilities and other material segment items

Disclosure about General Information

An entity shall disclose the following general

information about an operating segment:

 Factors used to identify the reportable segments

 Type of products and services from which each
reportable segment derives revenue

An entity shall disclose the revenue from

external customers for each product and services

Entity Wide Disclosure

Entity wide disclosure are additional information

that is required to be disclosed by all entities if such
information is not provided as part of the reportable
segment information

An entity shall disclose information about the

following;

 Information about products and services

 Information about geographical areas
 Information about major customers