53082232-Operating-Segment.docx

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OPERATING SEGMENTS & SEGMENT REPORTING IFRS 8: OPERATING SEGMENTS The IFRS requires publicly held entities to report certain information about the following:- Their products and services. Their geographic areas in which they operate. Their major customers. The IFRS specifies how an entity should report information about its operating segments in annual financial statements and, as a consequential amendment to IAS 34 Interim Financial Reporting, requires an entity to report selected information about its operating segments in interim financial reports. It also sets out requirements for related disclosures about products and services, geographical areas and major customers. SCOPE OF IFRS 8: 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 or that files, or is in the process of filing, its (consolidated) financial statements with a securities commission or other 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 an operating segment as follows. An operating segment is a component of an entity: [IFRS 8.2] MFC, UTKAL UNIVERSITY Page 1
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OPERATING SEGMENTS & SEGMENT REPORTING 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 reviewed regularly 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 REPORTABLE SEGMENTS: IFRS 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: [IFRS 8.13] Specified criteria for reportable segment: Separate information must be reported for an operating segment that meets any of the following quantitative thresholds: 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 i.
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