IFRS 8 Operating

Segments
issued in November 2006 and applies to annual periods
beginning on or after 1 January 2009.

Core Principle
An

entity is required to disclose

information to enable users of its
financial statements to evaluate
the nature and financial effects of
the types of business activities in
which it engages and the
economic environments in which
it operates

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 instrument are traded in a
public market
that files, or is in the process of filling, its
(consolidated)
securities

financial

commission

statements
or

other

with

regulatory

organisation for the purpose of issuing any class of

instruments in a public market [IFRS 8.2]

 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 [IFRS 8.4]

Operating Segments
IFRS

8 defines operating segment as follows. An

operating segment is a component of an entity: [IFRS

8.2]
that engages business activities from which it may earn
revenues and incur expenses
whose operating results are reviewed regularly by the entitys
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.

Chief Operating Decision

Maker
Allocate

resources
Assess the performance of the
operating segments of the entity
Often, he is chief executive
officer or chief operating officer

Aggregation of Two or More

Operating Segments into One
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:
the nature of the products and services;
the nature of the production processes;
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 (e.g.
banking, insurance, or public utilities).

Reportable Segments
IFRS

8 requires an entity to report financial and

descriptive
segments.

information
Reportable

about
segments

its
are

reportable
operating

segments or aggregations of operating segments that

meet specified criteria: [IFRS 8.13]
it reported revenue, from both external customers and
intersegment sales or transfers, is 10 percent or more of the
combined revenue, internal and external, of all operating
segments, or

Reportable Segments
the absolute measure of its reported profit or loss is 10
percent or more of the greater, in absolute amount, of (i) the
combined reported profit of all operating segments that did
not report a loss and (ii) the combined reported loss of all
operating segments that reported a loss, or
its assets are 10 percent or more of the combined assets of all
operating segments.

Segme Identifiable External

Internal
nt
Assets
revenues revenues

Total

Profit/
(Loss)

10M

25M

5M

30M

8M

4M

8M

2M

10M

(3M)

4M

6M

1M

7M

1M

20M

5M

8M

13M

(4M)

11M

22M

4M

26M

11M

Total Assets

49M

Total Revenues of all segments

86M

Combined profits of all segments operating at

a profit

20M

Combined losses of all segments operating at

a loss

7M

Segme
nt

Identifiable
Assets

External
Internal
revenues revenues

Total

Profit/
(Loss)

10M

25M

5M

30M

8M

4M

8M

2M

10M

(3M)

4M

6M

1M

7M

1M

20M

5M

8M

13M

(4M)

11M

22M

4M

26M

11M

Identifiable

assets are at least

4.9M
Total revenues are at least
8.6M
Operating result is at least

Reportable Segments
Operating segments that do not meet any of the
quantitative

thresholds

outlined

may

be

considered reportable, and separately disclosed,

if management believes that information about
the segment would be useful to users of the
financial statements.

Reportable Segments
If

the total external revenue reported by operating

segments constitutes less than 75 percent of the

entity's revenue, additional operating segments must
be identified as reportable segments (even if they do
not meet the quantitative thresholds set out) until at
least 75 percent of the entity's revenue is included in
reportable segments. [IFRS 8.15]

Segme Identifiable External

Internal
nt
Assets
revenues revenues

Total

Profit/
(Loss)

10M

25M

5M

30M

8M

4M

8M

2M

10M

(3M)

4M

6M

1M

7M

1M

20M

5M

8M

13M

(4M)

11M

22M

4M

26M

11M

Total Assets

49M

Total Revenues of all segments

86M

Combined profits of all segments operating at

a profit

20M

Combined losses of all segments operating at

a loss

7M

Segme
nt

Identifiable
Assets

External
Internal
revenues revenues

Total

Profit/
(Loss)

10M

25M

5M

30M

8M

4M

8M

2M

10M

(3M)

4M

6M

1M

7M

1M

20M

5M

8M

13M

(4M)

11M

22M

4M

26M

11M

Identifiable

assets are at least

4.9M
Total revenues are at least
8.6M
Operating result is at least

Disclosure Requirements

Required disclosures include:

general information about how the entity identified its operating
segments and the types of products and services from which each
operating segment derives its revenues [IFRS 8.22]
judgements made by management in applying the aggregation
criteria to allow two or more operating segments to be aggregated
[IFRS 8.22(aa)]*
information about the profit or loss for each reportable segment,
including certain specified revenues** and expenses** such as
revenue from external customers and from transactions with other
segments, interest revenue and expense, depreciation and
amortisation, income tax expense or income and material non-cash
items [IFRS 8.21(b) and 23]

Disclosure Requirements
a measure of total assets* and total liabilities* for each reportable
segment, and the amount of investments in associates and joint
ventures and the amounts of additions to certain non-current assets
('capital expenditure') [IFRS 8.23-24]
an explanation of the measurements of segment profit or loss,
segment assets and segment liabilities, including certain minimum
disclosures, e.g. how transactions between segments are measured,
the nature of measurement differences between segment information
and other information included in the financial statements, and
asymmetrical allocations to reportable segments [IFRS 8.27]

Disclosure Requirements
reconciliations of the totals of segment revenues, reported
segment profit or loss, segment assets*, segment liabilities*
and other material items to corresponding items in the entity's
financial statements [IFRS 8.21(b) and 28]
some entity-wide disclosures that are required even when an
entity has only one reportable segment, including information
about each product and service or groups of products and
services [IFRS 8.32]
analyses of revenues and certain non-current assets by
geographical area with an expanded requirement to disclose
revenues/assets by individual foreign country (if material),
irrespective of the identification of operating segments [IFRS
8.33]
information about transactions with major customers [IFRS
8.34]