may not earn revenues or may earn revenues that are only incidental to the

May not earn revenues or may earn revenues that are

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may not earn revenues or may earn revenues that are only incidental to the activities of the entity and would not be operating segments. For the purposes of this IFRS, an entity’s post-employment benefit plans are not operating segments Inter-firm comparability
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- Allowing management to determine what components of their operation will constitute ‘operating segments’ leads to concerns about comparing the results of operating segments of different organisations operating across similar industries - However, the standard-setters decided that the increased relevance of the information outweighs this concern pertaining to comparability Defining a reportable segment - A reportable segment is an operating segment or an aggregation of operating segments that meet specific criteria provided in AASB 8 - A reportable segment is an operating segment for which segment information is disclosed pursuant to AASB 8 - In relation to reportable segments, paragraph 11 of AASB 8 requires: o An entity shall report separately information about each operating segment that o (a) has been identified in accordance with paragraphs 5–10 or results from aggregating two or more of those segments in accordance with paragraph 12, and o (b) exceeds the quantitative thresholds in paragraph 13 o Paragraphs 14 to 19 specify other situations in which separate information about an operating segment shall be reported Aggregation of segments - Paragraph 12 of AASB 8 states: o Operating segments often exhibit similar long-term financial performance if they have similar economic characteristics . For example, similar long-term average gross margins for two operating segments would be expected if their economic characteristics were similar. o Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of this Standard, the segments have similar economic characteristics, and the segments are similar in each of the following respects : o (a) the nature of the products and services o (b) the nature of the production processes o (c) the type or class of customer for their products and services o (d) the methods used to distribute their products or provide their services, and o (e) if applicable, the nature of the regulatory environment, for example, banking, insurance or public utilities - Clearly, whether or not we aggregate two or more operating segments for the purposes of external reporting will be a matter of professional judgement (and is done by internal management) Quantitative thresholds for disclosing operating segments - Paragraph 13 of AASB 8 states: o An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds:
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o (a) its reported revenue , including both sales to external customers and inter- segment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments o (b) the absolute amount of its reported profit or loss is 10 per cent or more of the greater,
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