IFRS8 Operating segments

Implementation guidance

Contents

Introduction

Section 1

Section 2

Section 3

16

Section 4

25

IFRS8 and IAS 14: The key differences

Application of the requirements of IFRS8

Illustrative example

Frequently asked questions

This publication is intended to assist readers in understanding the requirements of and

does not attempt to explain all of the requirements of IFRS8. In case of doubt as to
the requirements, it is essential to refer to the relevant paragraph of IFRS8 and, when
necessary, to seek appropriate professional advice.

IFRS 8 Operating segments Implementation guidance

Introduction

Overview
This publication provides information
about the requirements of the newly
issued IFRS8 Operating Segments,
which becomes effective for annual
reporting periods beginning on or after
1January2009. It has been designed
to help those responsible for preparing
IFRS-based financial statements apply and
understand the new requirements.
Our commentary and analysis of the
Standard is divided into four sections:

Section 1: Provides an analysis of

the key differences between the

requirements of IFRS8 and the
standard it will replace, IAS 14
Segment Reporting.
Section 2: Explains how to identify
reportable operating segments, using
flowcharts to highlight the decisions
that need to be made. It also contains a
number of examples to illustrate what
is intended by the Standard.
Section 3: Provides an illustration of
the disclosures required by IFRS8,
with commentary highlighting when
the disclosures may differ from those
required by IAS 14.
Section 4: Answers some frequently
asked questions (FAQs) about the
application of IFRS8.

Background
IFRS8 differs from its predecessor
because it introduces a management
reporting approach to identifying and
measuring the results of reportable
operating segments. As the measurement
of the segment results reported is no
longer dictated by the measurement
and recognition criteria of financial
reporting standards, reconciliations
are required where information being
presented to management differs from
IFRS information in the primary financial
statements. Some entities may need to
develop new processes in order to address
these reconciliation requirements.
As entities manage their businesses
in different ways, segment reporting
disclosures made by similar-sized entities
in similar industries are unlikely to be
directly comparable. Our publication,
Observations on the Implementation of
IFRS, indicated that there was diversity in
the way entities reported their segments
using IAS 14. Disclosures may be even
less comparable when IFRS8 comes
intoeffect.
The disclosure requirements in IFRS8 are
extensive, and we encourage all entities
to study the Standard carefully well ahead
ofits adoption.

IFRS 8 Operating segments Implementation guidance

Segment reporting was identified as

part of the International Accounting
Standards Boards (IASB or Board) shortterm project to reduce the differences
between International Financial Reporting
Standards and US GAAP. In January2005
the IASB decided the best way to achieve
convergence in relation to segment
reporting was to adopt the approach
of the equivalent US standard (SFAS
131: Disclosures about Segments of an
Enterprise and Related Information).
As a result ED 8 Operating Segments
was issued in January 2006, and the
final Standard, IFRS8, was released in
November 2006. IFRS8 will replace
IAS 14 for reporting periods beginning
on or after 1 January 2009. However,
comparative information is required
when IFRS8 becomes effective, which
means that entities need to capture
IFRS8 segment information from
1January2008.
The IASB believes that financial reporting
will improve because the management
approach to the reporting of segments
allows users of financial statements to
examine an entitys operations through
the eyes of management. An important

aspect of IFRS8 is the requirement to

disclose information that is actually being
used internally by management. The IASB
maintains that, because the segment
information required to be disclosed will
be readily available, it should help entities
save time and money.
Although adopting the management
approach does have benefits, in
commenting on ED 8, some, including
Ernst&Young, argued that it is inferior
to IAS 14 because segment information
does not have to be reported on the
same basis as the financial statements
(using IFRS) and that key terms such as
segment revenue and segment assets
are not defined. To counter this criticism
the final Standard requires increased
disclosure regarding the basis on which the
information has been prepared.
Overall, the IASB believes the benefits of
the management approach, together with
some expanded disclosure, will outweigh
the lack of comparability that might arise,
which is why the decision to adopt the US
GAAP approach was made.

IFRS 8 Operating segments Implementation guidance

Section 1

IFRS8 and IAS 14:

The key differences

The key differences between IFRS8 and

IAS 14 in identifying and measuring
reportable segments are outlined
below and are followed by a summary
of the disclosures required by the
newStandard.

Identification of segments

IFRS 8 Operating segments Implementation guidance

IFRS8 adopts the management

reporting approach to identifying

operating segments. It is likely that in
many cases, the structure of operating
segments will be the same under
IFRS8 as under IAS 14, because IAS
14, like IFRS8, defines reporting
segments as the organisational units
for which information is reported to
key management personnel for the
purpose of performance assessment
and future resource allocation. When
an entitys internal structure and
management reporting system are not
based either on product lines or on
geography, IAS 14 requires the entity
to choose one as its primary segment
reporting format. IFRS8, however,
does not impose this requirement
to report segment information on a
product or geographical basis and in
some cases this may result in different
segments being reported under IFRS8
comparedwith IAS 14.
An entity is first required to identify
all operating segments that meet the
definition in IFRS8 (refer to detailed
discussion in Section 2). Onceall

operating segments have been

identified, the entity must determine
which of these operating segments are
reportable. If a segment is reportable,
then it must be separately disclosed.
This approach is the same as that
required by IAS 14 except that it does
not require the entity to determine a
primary and a secondary basis of
segment reporting.
Under IFRS8, for the purpose of
identifying reportable segments, no
distinction is made between revenues
and expenses relating to transactions
with third parties and revenues and
expenses relating to transactions with
other parts of the group. This means
that vertically integrated operations
may be composed of several segments
for the purpose of IFRS8. However,
under IAS 14 a business segment or
geographical segment qualifies as a
reportable segment only if a majority
of its revenue is earned from sales
to external customers. This is an
important difference that may result
in additional segments being disclosed
under IFRS8.

Measurement of segment
information
IFRS8 requires that the amount

of each segment item reported is

the measure reported to the chief
operating decision maker (CODM) in
internal management reports, even
if this information is not prepared in
accordance with the IFRS accounting
policies of the entity. This may result
in differences between the amounts
reported in segment information
and those reported in the entitys
primary financial statements. Contrast
this with IAS 14, which requires the
segment information to be prepared in
conformity with the entitys accounting
policies for preparing its financial
statements (i.e., IFRS).
Unlike IAS 14, IFRS8 does not define
terms such as segment revenue,
segment profit or loss, segment
assets, and segment liabilities. As a
result, diversity of reporting practice
will increase.

Disclosure
As IFRS8 does not define segments

as either business or geographical

segments and does not require
measurement of segment amounts
based on an entitys IFRS accounting
policies, an entity must disclose an
explanation of how it determined its
reportable operating segments, and the
basis on which the disclosed amounts
have been measured. These disclosures
include reconciliations of the totals
of key segment amounts to the
corresponding entity amounts reported
in the IFRS financial statements.
A measure of profit or loss and assets
for each segment must be disclosed.
Additional line items, such as interest
revenue and interest expense, are
required to be disclosed if they are
provided to the CODM (or included
in the measure of segment profit
or loss reviewed by the CODM). IAS
14, by contrast, specifies the items
that must be disclosed for each
reportablesegment.

IFRS 8 Operating segments Implementation guidance

Disclosures are required when an entity

receives more than 10% of its revenue

from a single customer. In this instance,
the entity must disclose this fact, the
total amount of revenue earned from
each such customer, and the name of
the operating segment that reports the
revenue. This is not required by IAS 14.
Consequential amendments
have been made to the segment
disclosures required by IAS 34 Interim
FinancialReporting.

Section 2

Application of the
requirements of IFRS8

This section addresses the following:

A Core principle What is the aim of

IFRS8?
B Scope Which entities does IFRS8

apply to?
C Operating segments What are

E
F
G

operating segments and how are

theydetermined?
Reportable segments What are
reportable segments and how are
theydetermined?
Measurement How are the amounts
to be disclosed measured?
Disclosures What disclosures
arerequired?
Transition and effective date When
isit applicable?

A. Core principle What is the

aim of IFRS8?

B. Scope Which entities does

IFRS8 apply to?

The objective of IFRS8 is characterised in

paragraph 1 as a core principle and states
that an entity must: Disclose information
to enable users of its financial statements
to evaluate the nature and financial
effects of the different business activities
in which it engages and the economic
environments in which it operates.

IFRS8 applies to the financial statements

of entities:

Where an entity with a matrix

organisational structure is unable to
clearly identify operating segments
(because the CODM regularly reviews
the operating results on both a product
line and a geographical area basis) it is
required to look to the core principle
in determining the appropriate basis
ofsegmentation.

whose debt or equity instruments are

traded in a public market, or

that file, or are in the process of
filing, their financial statements with
a securities commission or other
regulatory organisation for the purpose
of issuing any class of instruments in a
public market.
These are the same entities that were
subject to IAS 14.
If an entity that is not required to apply
IFRS8 chooses to disclose information
about its segments that does not comply
with all the requirements of IFRS8,
it cannot refer to this information as
segment information.
When financial statements contain both
consolidated financial statements and the
parents separate financial statements,
segment information is required only for
the consolidated financial statements.

IFRS 8 Operating segments Implementation guidance

C. Operating segments What are operating segments and how are they determined?
An operating segment is defined as:
Acomponent of an entity:

These factors include:

that engages in business activities

of each component of the entity, the

existence of managers responsible for
them, and information presented to the
board of directors.
an operating segment will usually have
a segment manager who is directly
accountable to, and has regular
contact with, the CODM to discuss
the performance of the segment.
However, a single manager may
be the segment manager for more
than one operating segment. If the
characteristics in the definition quoted
above apply to more than one set of
components of an entity (e.g., to both
products-based and geographical
components) but there is only one set
for which segment managers are held

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 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.
Most entities will be able to identify their
operating segments easily by reference to
these characteristics. However, when this is
not the case, for example if the CODM uses
more than one set of segment information,
other factors may enable the operating
segments to be identified.

the nature of the business activities

IFRS 8 Operating segments Implementation guidance

responsible, then that set constitutes

the operatingsegments.
when an entity has a matrix
management structure resulting
in two or more overlapping sets
of components for which different
segment managers are responsible
and the CODM regularly reviews the
operating results of both components,
an entity must consider the core
principle of the Standard in order to
determine its operating segments.
To identify operating segments, four
decision steps are required as illustrated
inthe flowchart on the following page.

Step 1: Identify the CODM

The term chief operating decision

maker defines a function rather than

an individual with a specific title. The
function of the CODM is to allocate
resources to and assess the operating
results of the segments of an entity.
The CODM could be an individual, such
as the chief executive officer or the
chief operating officer, or it could be a
group of executives, like the board of
directors or a management committee.

Example
Assume that an entity has a president,
a chief executive officer, and a chief
operating officer. All three individuals
serve on a management committee,
which exists to make operating
decisions related to the different
business activities of the entity, and
the committee operates on the basis
of consensus among its members.
In this case, the CODM would be the
management committee itself. However,
the fact that a management committee
exists does not necessarily mean
that the committee is the CODM. For
example, if the chief executive officer
can override the decisions made by the
committee, then the chief executive
officer may be the CODM, because
the CODM essentially controls the
management committee, and therefore
the CODM has control over the operating
decisions made. However, it is unlikely in
practice to make any difference whether
the management committee or the
chief executive officer is regarded as
the CODM, since the operating results
information that is regularly reviewed by
both is likely to be identical.

Step 2: Can the component generate

revenue and incur expenses from its
business activities?

Since the test is whether the

component may earn revenues and

incur expenses from its business
activities, a start-up operation that
has not yet earned revenues may
be an operating segment, as may
a component of an entity that sells
primarily or exclusively to other
components of the same entity.
Conversely, operations, such as
corporate treasury or headquarters,
which generate no revenues or
generate revenues that are only
incidental to the activities of the
entity,will not be operating segments.

Step 3: Are the components operating

results regularly reviewed by the CODM
as a basis for resource allocation and
performance assessment?

A component of the entity that is

regularly reviewed by the CODM is likely

to be an operating segment. In practice,
a key issue in identifying operating
segments is the extent to which the
operating results of business units are
aggregated for the purpose of review
by the CODM. In many cases, the CODM
will receive and review information
about the operating results of individual
business units as well as of groups of
business units, and it may be difficult to
establish which set of information the
CODM uses in order to make decisions

IFRS 8 Operating segments Implementation guidance

about resources to be allocated and

to assess performance. In these
circumstances, IFRS8 states that other
factors may help identify a single set of
components as constituting an entitys
operating segments, including the
nature of the business activities of each
component, the existence of managers
responsible for them, and information
presented to the board of directors. In
this regard, IFRS8 refers in particular
to the role of what itdescribes as the
segmentmanager.

For example, the CODM may review

one type of result based on product

lines and another type based on
geographic area. IFRS8 states that,
inthese situations, operating segments
should be determined based on the
accountability for performance of
the managers who report directly
to the CODM. If the managers who
report directly to the CODM each have
responsibility for a particular product
family, then each of those product
families is an operating segment. In
a matrix management structure with
dual or overlapping management
responsibilities (e.g., product-based and
geographical areas of responsibility)
judgment may need to be exercised
in identifying the set of operating
segments that best applies the core
principle of IFRS8.

Example
An entity has seven operating
units, which are grouped into three
divisions. Each of the three divisions
has a segment manager who reports
directly to the CODM. In this case, it
is likely that the operating segments
for reporting purposes would be the
divisions as opposed to the operating
units, because the divisions have
segment managers who report
directly to the CODM. However, the
existence of the managers does not
necessarily mean that there are only
three segments. If the CODM were
to use information from the seven
operating units to assess performance
and allocate resources to each of the
seven units, this would suggest that
the responsibilities of the divisional
managers were limited and that there
were seven operating segments.
Step 4: Is discrete financial information
available for the component?

Step 2
Can the component
generate revenue and
incur expenses from
its business activities?

Step 1
Identify the CODM

No

Yes

Step 3
Are the components
operating results
regularly reviewed by
the CODM as a basis
for resource allocation
and performance
assessment?

No

The component is
not an operating
segment

Yes

Step 4
Determine
whether the operating
segmentis reportable
(Refer to part D on page 10)

Yes

Is discrete nancial
information available
for the component?

No

This refers to the financial information

made available to the CODM for the

purpose of reviewing performance and
in determining how resources should
be allocated. For a component to be
an operating segment, the financial
information about the operating
results of the component should
be sufficiently detailed to enable
the CODM to make decisions about
resources to be allocated and to assess
its performance.

IFRS 8 Operating segments Implementation guidance

D. Reportable segments What are reportable segments and how are they determined?
Although the definition of operating
segments in IFRS8 differs from the
definition in IAS 14, the rules in IFRS8
enabling entities, if they so wish, to
aggregate two or more operating
segments (into reportable segments)
for the purpose of disclosing segment
information in the financial statements
are identical to those in IAS 14. (Note that
aggregation of operating segments is not
required, although IFRS8 acknowledges
that there may be a practical limit to the
number of reportable segments that an
entity separately discloses, beyond which
segment information may become too
detailed, and suggests that the practical
limit may be around 10.)
Multiple operating segments may be
aggregated into a single reportable
segment if aggregation is consistent with
the core principle of IFRS8, the segments
have similar economic characteristics,
and the segments are similar in all of the
following respects:

10

the nature of the products and services

the nature of the production processes
the type of class of customer for their
products and services
the methods used to distribute their
products or provide their services
if applicable, the nature of the
regulatory environment, for example,
banking, insurance or public utilities.

The Standard does not elaborate on

the meaning of similar economic
characteristics except to say that: Similar
long-term average gross margins for two
operating segments would be expected
if their economic characteristics were
similar. This is a somewhat roundabout
way of saying the same thing as IAS 14,
under which operating segments could be
combined if they exhibit similar long-term
performance and are similar in all of the
respects listed above.

IFRS 8 Operating segments Implementation guidance

In determining whether or not operating

segments have similar long-term average
gross margins, an entity must consider
past, current and future performance.
For example, consider two operating
segments that have had similar gross
margins over the last five years. In the
current year, a warehouse is destroyed
by fire, resulting in a large inventory
write-down impacting the gross margin
of only one of the operating segments.
Inthis instance, while the gross margins
of the two operating segments may differ
significantly in the current year, past
performance is expected to be maintained
in the future because the warehouse fire
has not altered the underlying operations
or profitability of the operating segment.
In this case, the two operating segments
may still be considered to have similar
economic characteristics.

In addition, while IFRS8 highlights

similar long-term gross margins as
an indicator that operating segments
have similar economic characteristics,
other measures could be used to assess
whether this criterion is met. For example,
sales metrics, return on investment,
or other standard industry measures
such as earnings before interest, taxes,
depreciation and amortisation (EBITDA)
may be more relevant than gross margins
if the CODM assesses performance and
allocates resources based on other such
key economic characteristics. Ultimately
the assessment will be dependent on
the facts and circumstances of each
situation, and judgment will be required
in determining whether or not operating
segments may be combined.

Information must be reported for each

(aggregated) operating segment that:

contributes 10% or more of the entitys

total sales (combining internal and
inter-segment sales),
earns 10% or more of the combined
reported profit of all operating
segments that did not report a loss (or
10% or more of the combined reported
loss of all operating segments that
reported a loss), or
has 10% or more of the combined
assets of all operating segments.

These are exactly the same thresholds

as in IAS 14. However, under IAS 14
a segment must earn a majority of its
revenue from sales to external customers.
This is not the case under IFRS8 (i.e., an
operating segment for IFRS8 purposes
may earn a majority of its revenues from
sales to other segments).

After the aggregation process described

above, if the total external revenue
reported by operating segments
constitutes less than 75% of the entitys
revenue, additional operating segments
must be identified until at least 75%
of the entitys revenue is included in
reportable segments. For this purpose,
operating segments that do not meet the
quantitative thresholds described above
may be combined to produce a reportable
segment only if they share similar
economic characteristics and a majority
ofthe aggregation criteria listed above.
Where an entity is required to disclose
further operating segments in order to
meet the 75% threshold described, it
should be noted that IFRS8 does not
require an entity to disclose the next
largest operating segment. This may
be the most logical approach. However,
an entity may disclose any other
operating segment in order to meet the
75%threshold.
Once reportable segments that, in
aggregate, account for at least 75%
of consolidated revenue have been
identified, information about all other
operating segments, and other activities
that are not part of an operating segment,
are combined and disclosed in an all other
segments category.
The flowchart on the following page
summarises the steps involved in
identifying reportable segments,
and a case study illustrates some of
the considerations in determining
reportablesegments.

IFRS 8 Operating segments Implementation guidance

11

Step 5
Do some operating
segments meet all the
aggregation criteria?

Yes

Aggregate operating
segments if desired

No

Step 6
Do some operating
segments exceed the 10%
quantitative thresholds?

Yes

No

Step 7

These are
reportable
segments to
be disclosed

Combine
operating
segments
if desired

Yes

Do some operating
segments have similar
economic characteristics
and meet a majority of
the aggregation criteria?
No

Step 8
Do the reportable
segments identied
account for 75% of
consolidated revenue?

Yes

No

Identify additional
operating segments
(and if appropriate,
aggregate with other
reportable segements)
until external revenue
of all segments > 75%
of consolidated returns

12

IFRS 8 Operating segments Implementation guidance

Aggregate remaining
segments and other
activities into
all other segments
category

Case Study
The operating segments of a transport
and logistics group are:
Operating
segment
Logistics/distribution
services

% of consolidated
revenue
55

Parcels

Van hire

Home moving

Commercial moving

Document storage

Refuse collection
services

E. Measurement How are

the amounts to be disclosed
measured?
The amount of each segment item
disclosed must be the measure reported
to the CODM any adjustments and
eliminations made in preparing the
financial statements may not be reflected
in a reportable segment amount unless
those adjustments and eliminations are
included in amounts used by the CODM.
If the CODM uses more than one measure
of a segments profit or loss, assets or
liabilities, the reported measures should
be those that management believes are
most consistent with those used in the
entitys consolidated financial statements.

No two operating segments share all the

IFRS8 aggregation criteria.
Only the logistics/distribution services
segment meets the 10% quantitative
threshold for a reportable segment.
However, as it accounts for 55% of
consolidated revenue, additional
operating segments must be identified
as reportable segments. The entity
concludes that the home moving and
commercial moving segments share a
majority of the aggregation criteria and
decides to combine them to produce
a reportable segment. However, that
combined segment (accounting for 17% of
consolidated revenue) and the logistics/
distribution services segment together

Example
If the CODM uses a measure of
segment profit before income taxes
that includes depreciation expense
and one that does not, the appropriate
measure to be reported for operating
segments is the measure that includes
depreciation expense, because
depreciation expense is included in the
measurement of the corresponding
amount (i.e., profit before income
taxes) in the consolidated financial
statements.
The key practical benefit for an entity
using the measurement approach required
by IFRS8 is that it should be quick and
easy to produce the information.

IFRS 8 Operating segments Implementation guidance

account for only 72% of consolidated

revenue. Accordingly, it is necessary to
designate another operating segment as
a reportable segment so that at least 75%
of consolidated revenue is included in
reportable segments. It would be logical
to designate the next largest operating
segment, in this case parcels, but the
entity may choose to report the van hire,
document storage or refuse collection
services segment in order to satisfy the
75% revenue threshold.

As the amounts to be disclosed are based

solely on the amounts the CODM reviews,
it follows that, unlike segment information
reported under IAS 14, these amounts
may not be measured in accordance with
IFRS. As discussed in Part F on pages 14
and 15, IFRS8 requires the reportable
segment amounts to be reconciled to the
relevant (IFRS) amounts for the entity
as a whole, but only in total and not on
a segment-by-segment basis. For users
of financial statements, therefore, the
measurement approach in IFRS8 may
reduce comparability of the segment
information presented by entities in
similar industries compared with IAS 14.

13

F. Disclosure What disclosures are required?

IFRS8 requires the following disclosures:
1 General information:

the factors used to identify the entitys

reportable segments, discussion
of how the entity is organised and
whether operating segments have
beenaggregated
the types of products and services
from which each reportable segment
receives its revenues

2 For each reportable segment,

14

information about profit or loss,

assetsand liabilities including:
a measure of profit or loss
a measure of total assets
a measure of liabilities if such an
amount is regularly provided to
theCODM
the amount of any of the following
items that are either included in the
measure of segment profit or loss
reviewed by the CODM or otherwise
regularly provided to the CODM:
revenues from external customers
revenues from transactions with
other operating segments within
theentity
interest revenue and expense
(interest revenue and expense may
only be reported on a net basis
when a majority of a segments
revenues are from interest and the

CODM relies primarily on net interest

revenue to assess the performance
of the segment and make decisions
about resources to be allocated to
the segment)
depreciation and amortisation
material items of income and
expense disclosed in accordance
with paragraph 86 of IAS 1
Presentation of Financial Statements
the entitys interest in 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.

3 any of the following items that are

either included in the measure of

segment assets reviewed by or
otherwise regularly provided to
theCODM:
the investment in equity-accounted
associates and joint ventures
total additions to non-current assets
other than financial instruments,
deferred tax assets, post-employment
benefits and rights arising under
insurance contracts (i.e., property,
plant and equipment and intangible
assets and investments, for the
mostpart)

IFRS 8 Operating segments Implementation guidance

4 An explanation of the measurement

basis of segment information,including:

the basis of accounting for inter-

segment transactions
if not apparent from the reconciliations
described below, the nature of any
differences between the measurement
of the following items in the reported
segment information and the
same items in the entitys financial
statements in accordance with IFRS:
profit or loss before income tax and
discontinued operations
assets
liabilities
5 As well as accounting policy

differences, measurement differences

might include policies for allocating
central costs or jointly used or
shared assets and liabilities to
individualsegments:
the nature of any changes from prior
periods in the measurement methods
used to determine segment profit or
loss and the effect, if any
the nature and effect of any
asymmetrical allocations to reportable
segments (e.g., an allocation of
depreciation expense when the related
depreciable assets are not allocated to
the samesegment)

6 Reconciliations of:

the total of the reportable segments

revenues to the entitys revenue

the total of the reportable segments
profit or loss to the entitys profit
or loss before income tax and
discontinued operations (or, if items
such as income tax are allocated to
segments, to profit or loss after tax)
the total of the reportable segments
assets to the entitys assets
the total of the reportable segments
liabilities to the entitys liabilities
the total of the reportable segments
amounts for every other material
item of information disclosed to the
corresponding amount for the entity.

7 All material reconciling items must be

separately identified and described.

8 Entity-wide disclosures, to the

extent that this information is not

provided as part of the reportable
segmentinformation:
external revenues on an IFRS basis
for each group of similar products
andservices
external revenues on an IFRS basis
attributed to (1) the entitys country
of domicile and (2) all foreign
countries, with separate disclosure
of revenues attributed to individual
foreign countries, if material; the
entity must disclose the basis on which
revenues have been attributed to
differentcountries

non-current assets on an IFRS basis

other than financial instruments,

deferred tax assets, post-employment
benefit assets, and rights arising under
insurance contracts (i.e., property,
plant and equipment, intangible assets
and investments, for the most part):
located in the entitys country of domicile
located in all foreign countries.
9 Separate disclosure of assets in an

individual foreign country must be

made if the assets are material.
10 Where any of the entity-wide

information required to be disclosed is

not available, and the cost to develop
it would be excessive, an entity must
disclose that fact.
11 If revenues from a single external

customer (for which purpose entities

under common control and entities
under the control of a particular
government are in each case
considered to be a single customer)
amount to 10% or more of an entitys
revenues, the total revenues from
the customer concerned and the
identity of the segments reporting the
revenues must be disclosed. Disclosure
of the name of the customer(s) is
notrequired.

IFRS 8 Operating segments Implementation guidance

12 If an entity changes the structure of

its internal organisation in a manner

that causes the composition of its
reportable segments to change, the
corresponding information for earlier
periods must be restated unless the
information is not available and the
cost to develop it would be excessive,
in which case segment information for
the year in which the change occurs
must be disclosed on both the old basis
and the new basis of segmentation
(unless the necessary information is
not available and the cost to develop it
would be excessive).
13 Many of the disclosures required by

IFRS8 should come from readily

available information within the
entity so that a minimal amount of
time and effort should be required
to prepare them. More effort may
be required, however, in preparing
the reconciliations of the segment
information to the relevant IFRS
amounts appearing in the financial
statements and the associated
explanations. Prior to the adoption
of IFRS8 an entity should assess its
systems and processes to ensure
that the required information can
beprepared.

15

Section 3

Illustrative example

The following example applies the steps

set out in the flowcharts and related
guidance in Section 2 to arrive at the
information that a fictional entity, Super
Food Limited, based in Germany, must
disclose in its consolidated financial
statements to comply with IFRS8. In
Part A, IFRS8 requirements are applied
to Super Food Limited to ascertain what
disclosures are required. In Part B the
financial statement disclosures required in
annual financial statements are illustrated
for the year ended 31 December
200X. Part C illustrates the disclosure
requirements of IAS 34 for the six-month
period ended 30 June 200X.
No comparative information is included
in the example, as the disclosure
requirements apply equally to both current
year and comparative periods included in
an entitys financialstatements.

16

A. Identification of operating
segments and reportable
segments
The following information has been
obtained as a basis for determining the
entitys reportable segments:

Per Step 1 of the flowchart on page 9,

the CODM is the chief executive officer.

Per Step 2, the following 10 business

activities, ranked by the size of their
revenues, also incur expenses:

retail sales of bakery products

direct catering services to the
business market
direct catering services to the
domestic market
manufacturing of bakery products
cook book publishing
food magazine publishing
web publishing
leasing of offices
leasing of manufacturing sites
mail order distribution of
bakeryproducts.

IFRS 8 Operating segments Implementation guidance

Per Step 3, the CODM reviews the

results of the following eight business

activities:
mail order distribution of
bakeryproducts
retail sales of bakery products
direct catering services to the
business market
direct catering services to the
domestic market
manufacturing of bakery products
cook book publishing
food magazine publishing
leasing of property (includes
intragroup leasing and property
leased tothird parties).

Per Step 4, discrete financial

information is available for all the

business activities identified in Step
3. The entity, therefore, has eight
operating segments as defined
byIFRS8.
Per Step 5 of the flowchart on page
13, only the cook book and food
magazine publishing operations are

similar in all the respects listed in

IFRS8 and therefore meet all of the
segment aggregation criteria. These
two segments are combined into one
reportable segment called Publishing
for financial reporting purposes.
Per Step 6, the mail order distribution
of bakery products, direct catering
services to the domestic market, direct
catering services to the business
market, and leasing of property do not
exceed any of the 10% quantitative
thresholds, and so they are not
required to be separately reported.
Per Step 7, the two operating
segments providing catering services
(which individually do not meet
the quantitative thresholds) are
regarded as having similar economic
characteristics and share a majority
of the aggregation criteria and so are
combined into Catering. However, mail
order and leasing of property do not
share a majority of the aggregation
criteria with any other segment and
so they are not combined with any
othersegments.

Per Step 8, the reportable segments

identified thus far (retail sales of bakery

products, catering, manufacturing
of bakery products and publishing)
account for more than 75% of
consolidated revenue and so no
additional reportable segments are
required to be identified. As shown in
the flowchart, the remaining operating
segments (mail order and investment
property) are aggregated into an All
other segments category.

The majority of the revenues of the

bakery products manufacturing segment
arise from sales to other operating
segments. It is reported as an operating
segment under IFRS8 because it exceeds
the 10% quantitative threshold, even
though a majority of its revenues are
earned through sales to other operating
segments. Under IAS 14, it would not
have been reported because it does not
earn a majority of revenues from sales to
external customers.

B. Example disclosure: IFRS8

inannual financial statements
In the Super Food Limited example, the
information provided to the CODM is
based on the same accounting policies as
the financial statements (i.e., IFRS) with
the following exceptions:

segment profit or loss before tax

excludes any expenses associated

with share-based payments and other
management bonuses
finance costs, other income and income
taxes are managed on a group basis
and are not allocated to any segment
segment revenues in the publishing
segment and the related receivables
are recognised on shipment of the
books and magazines, rather than on
delivery to the customer.

Commentary
The following illustration shows the consolidated income statement and balance sheet
of Super Food Limited, as well as the required disclosures under IFRS8. Commentary
boxes highlight where key IFRS8 disclosures differ from those required by IAS 14 and
where entirely new disclosures are required. References to the relevant paragraphs of
IFRS8 are also provided to the right of each disclosure.

IFRS 8 Operating segments Implementation guidance

17

Super Food Limited

Consolidated Income Statement for the year ended
31Dec200X




31 December
200X
000
Sale of goods
Rendering of services
Rental income

Revenue
Cost of sales
Gross profit
Other income
Selling and distribution costs
Administrative expenses
Other expenses
Operating profit
Finance revenue
Finance costs
Share of profit of an associate
Profit before tax
Income tax expense
Profit for the year

18

IFRS 8 Operating segments Implementation guidance

237,489
17,131
1,404
256,024
(163,816)
92,208
1,585
(14,775)
(64,055)
(1,088)
13,875
785
(1,627)
83
13,116
(3,775)
9,341

Super Food Limited

Consolidated Balance Sheet as at 31 December 200X

Consolidated Balance Sheet as at 31 December 200X









31 December
200X
000

Equity and liabilities

Assets
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Investment in an associate
Available-for-sale investments
Deferred tax assets


33,919
10,893
6,195
764
10,082
383
62,236

Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and short-term deposits


33,875
39,873
153
22,628
96,529

Total Assets

31 December
200X
000

158,675

Equity attributable to equity holders of the parent

Issued capital
Retained earnings

52,375
39,190

Total equity

91,565

Non-current liabilities
Interest bearing loans and borrowings
Convertible preference shares
Provisions
Employee benefits liability
Deferred tax liability


15,078
2,778
5,100
2,544
3,103
28,603

Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Income tax payable
Provisions
Other liabilities


17,841
2,460
3,980
599
13,627
38,507

Total liabilities

67,110

Equity and liabilities

IFRS 8 Operating segments Implementation guidance

158,675

19

Commentary
The first paragraph of the segment information note is similar to what is required
under IAS 14. However, the subsequent narrative responds to new requirements
to provide sufficient detail for the reader to understand how the organisation is
structured, on what basis management has determined the reportable segments, and
whether any operating segments have been combined.
IFRS8 and IAS 14 both require the basis of pricing inter-segment transfers to be
disclosed. Discussion of the differences between the measurement of segment
results and the consolidated financial statements is a new requirement, because no
such differences could arise under IAS 14.

Note X Segment information

IFRS disclosure
requirement

The groups reportable segments are as follows:

The retail segment sells bakery products produced by the manufacturing segment

IFRS8.22(a)

IFRS8.22(b)

through retail outlets.

The catering segment provides catering services to both the domestic and
businessmarket.
The manufacturing segment produces bakery products for sale primarily to other
segments.
The publishing segment produces books and magazines on food and cooking.
The Other category consists of:

mail order distribution of bakery products, and

leasing of property to group companies and third parties.
For management purposes, the group is organised into eight business segments
based on their products and services. For financial reporting purposes, the publishing
segment combines the cook book publishing and magazine publishing businesses,
while the catering segment combines the business direct catering services and
domestic directcatering services.

IFRS8.22(a)

Management monitors the operating results of business segments separately for

the purpose of making decisions about resources to be allocated and of assessing
performance. Segment performance is evaluated based on operating profit or loss
which in certain respects, as explained in the table below, is measured differently from
operating profit or loss in the consolidated financial statements. Finance costs, finance
income and income taxes are managed on a group basis.
Operating segments 31 December 200X
Retail

Catering

Manufacturing

Publishing

Other

Eliminations and
Adjustments

Consolidated

000

000

000

000

000

000

000

IFRS8.23(a)

129,842

59,388

2,704

32,306

32,686

(902)

256,024

IFRS8.23(b)

Inter-segment

7,465

36,791

4,761

(49,017)

Total revenues

129,842

66,853

39,495

32,306

37,447

(49,919)

256,024

Revenues
Third party

1. Segment revenue and the related receivables for the publishing segment are recognised on shipment of goods.
In the consolidated financial statements, such revenue and receivables are recognised when the goods are
delivered to the retailer.

IFRS8.27

2. Sales between segments are made at prices that approximate market prices.

IFRS8.27(a)

20

IFRS 8 Operating segments Implementation guidance

Commentary
The disclosure of liabilities by segment is required under IAS 14. However, it is only
required by IFRS8 if it is provided to the CODM. In this example, a measure of segment
liabilities for operating segments is provided to the CODM, and is therefore disclosed.
IFRS8 requires additions to non-current assets other than financial instruments,
deferred tax assets, post-employment benefit assets and rights arising under insurance
contracts to be disclosed. Under IAS 14, only additions to property, plant and equipment
and intangible assets were disclosed. In most cases the amount to be disclosed under
IFRS8 will be the same as the amount disclosed under IAS 14.

Note X Segment information (continued)

Operating segments 31 December 200X
Retail

Catering

Manufacturing

Publishing

Other

Eliminations and
Adjustments

Consolidated

000

000

000

000

000

000

000

Profit before tax

6,887

4,716

1,283

1,169

3,284

(4,223)

13,116

Depreciation and
amoritisation

2,609

819

206

183

3,817

IFRS8.23(e)

306

306

IFRS8.23(i)

341

191

532

IFRS8.23(i)

Share of profit of
associate

83

83

IFRS8.23(g)

Segment assets

52,647

45,145

24,620

14,165

23,829

(1,731)

158,675

764

764

IFRS8.24(a)

Capital expenditure 5

8,579

1,207

1,842

216

63

11,907

IFRS8.24(b)

Segment liabilities

14,839

9,783

3,609

4,704

6,776

67,110

IFRS8.23

Decrease in fair value

of investment property
Gain on disposal of
property, plant and
equipment

Investment in associate

27,399

IFRS disclosure
requirement

IFRS8.23

IFRS8.23

3. Profit before tax does not include management bonus expense (1,489), share-based payment expense (990),
finance revenue (785) or finance costs (1,627), while the additional segment revenue recognised on shipment
of goods (902) included in segment profit before tax is not included in the consolidated profit before tax.

IFRS8.27(b)

4. As noted above, segment assets include receivables related to recognition of revenue on shipment (2,114)
and do not include deferred tax assets managed on a group basis (383).

IFRS8.27(c)

5. Capital expenditure consists of additions of property, plant and equipment and intangible assets.
6. Loans and borrowings (17,538), convertible preference shares (2,778), and tax liabilities (7,083) are
managed on a group basis, and are not allocated to operating segments.

IFRS 8 Operating segments Implementation guidance

IFRS8.27(d)

21

Note X Segment
information (continued)

IFRS disclosure
requirement

Geographic information
Revenue from external
customers

000

IFRS8.33(a)

C. Example disclosure: IFRS8 and IAS 34

This section provides an illustrative example of the disclosures
required in interim financial statements when applying IFRS8,
and the consequential amendments to IAS 34. The example uses
the same fictional company, Super Food Limited, and applies the
revised requirements of IAS 34 to interim financial statements.

Germany

75,123

France

30,476

Super Food Limited

United Kingdom

38,272

United States

62,349

Consolidated Income Statement for the six months ended

30 June 200Y

Other countries

49,804
256,024

The revenue information above is based on the

location of the customer. Revenue from one
customer amounted to 27,506,000, arising from
sales by the catering and publishing segments.

IFRS8.33(a)
IFRS8.34

Location of non-current
assets

IFRS8.33(b)

000

Germany

22,165

France

12,370

United Kingdom

10,518

United States

Sale of goods
Rendering of services
Rental income
Revenue

Gross profit
Other income
Selling and distribution costs
Administrative expenses
Other expenses

1,488
51,771

Non-current assets for this purpose consist

of property, plant and equipment, investment
properties, intangible assets and investment
inanassociate.

Operating profit
Finance revenue
Finance costs
Share of profit of an associate

Commentary

Profit before tax

The above table shows the entity-wide disclosures required

by IFRS8 to the extent that the information concerned is not
already disclosed elsewhere.

22

30 June
200Y
000

Cost of sales

5,230

Other countries





118,745
8,566
702
128,013
(81,908)
46,105
793
(7,388)
(32,028)
(544)
6,938
393
(814)
42
6,559

Income tax expense

(1,888)

Profit for the period

4,671

IFRS 8 Operating segments Implementation guidance

Super Food Limited

Consolidated Balance Sheet as at 30 June 200Y

Consolidated Balance Sheet as at 30 June 200Y





30 June
200Y
000





30 June
200Y
000

Assets

Equity and liabilities

Non-current assets

Equity attributable to equity holders of the parent

Property, plant and equipment

Investment properties
Intangible assets
Investment in an associate
Available-for-sale investments
Deferred tax assets


49,019
16,949
9,195
764
10,082
383
86,338

Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and short-term deposits

Total Assets

33,875
34,618
252
23,628
92,373
178,711

Issued capital
Retained earnings
Total equity

52,375
347,890
100,265

Non-current liabilities
Interest bearing loans and borrowings
Convertible preference shares
Provisions
Employee benefits liability
Deferred tax liability


12,618
2,778
5,100
2,544
5,103
28,143

Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Income tax payable
Provisions
Other liabilities

Total liabilities
Equity and liabilities

IFRS 8 Operating segments Implementation guidance

23,504
4,460
6,113
2,599
13,627
50,303
78,446
178,711

23

Note X Segment information

Operating segments 30 June 200Y
Retail

Catering

Manufacturing

Publishing

Other

Eliminations and
Adjustments

Consolidated

IFRS disclosure
requirement

000

000

000

000

000

000

000

IAS 34.16(g)(iv)

69,921

34,694

1,352

1,153

21,343

(450)

128,013

IAS 34.16(g)(i)

Inter-segment

3,733

18,396

2,381

(24,510)

IAS 34.16(g)(ii)

Total revenues

69,921

38,427

19,748

1,153

23,724

(24,960)

128,013

4,234

1,568

642

585

1,642

(2,112)

Revenues
Third party

Profit before tax

6,559

IAS 34.16(g)(iii)

1. Segment revenue and the related receivables for the publishing segment are recognised on shipment of goods.
In the consolidated financial statements, such revenue and receivables are recognised when the goods are
delivered to the retailer.
2. There has been no change in the basis of segmentation or the measurement of segment profit since the last
annual financial statements. Segment profit before tax does not include management bonus expense (515),
share-based payment expense (550), finance revenue (393) or finance costs (814), while the additional
segment revenue recognised on shipment of goods (626) included in segment profit before tax is not included
in the consolidated profit before tax.

IAS 34.16(g)(v)

The assets of the retail segment at 30 June 200Y amount to 76,803, compared with
52,647 at 31 December 200X. The material increase is due to the acquisition of new
retail outlets. There has been no material change in the assets of other segments.

IAS 34.16(g)(iv)

Commentary
Disclosure of external and inter-segment revenues is required only if the amounts
concerned are included in the measure of segment profit or loss provided to the CODM,
or otherwise provided to the CODM.
Disclosure of total segment assets is required by IAS 34 only where there has been
amaterial change since the last annual financial statements.
IAS 34 requires a reconciliation of segment profit or loss to the consolidated profit
or loss before tax. However, a reconciliation of segment revenues to the entitys
consolidated revenues is not required in interim financial statements.

24

IFRS 8 Operating segments Implementation guidance

Section 4

Frequently asked questions

This section addresses some frequently

asked questions relating to IFRS8. The
questions have been grouped by topic.

segments may also be combined if they

exhibit similar economic characteristics
and satisfy a majority of the aggregation
criteria (rather than all of the criteria).
(IFRS8.12,IFRS8.14)

Scope

Why are key terms such as segment

profit, segment assets and segment
liabilities not defined by IFRS8?

Are there any scope exclusions?

Yes, as in the case of IAS 14, IFRS8
applies only to entities whose securities
are traded in a public market. (IFRS8.2)
Does IFRS8 apply to entities that are not
required to prepare consolidated financial
statements?
Yes. IFRS8 applies to separate and
to individual financial statements. If a
listed entity is not required to prepare
consolidated financial statements then it
must comply with IFRS8. When a financial
report includes both consolidated financial
statements and the parents financial
statements, segment information is
required only in the consolidated financial
statements. (IFRS8.2)

Reportable operating
segments
In order to be able to aggregate operating
segments, must all of the aggregation
criteria be satisfied?
In order to aggregate two (or more)
operating segments that individually meet
any of the 10% quantitative thresholds
for a reportable segment, all criteria
must be satisfied. However, operating
segments that do not meet any of the
quantitative thresholds for reportable

Such terms are not defined by IFRS8

because the amounts disclosed are based
on each entitys internal management
reporting system. However, IFRS8
requires an entity to explain how the
measurement of these items differs
from the measurement bases applied
in preparing the entitys IFRS financial
statements and to reconcile the total of
the segment amounts to the relevant
amount in the entitys IFRS financial
statements. (IFRS8.27)
How is a discontinued operation to be
treated under IFRS8?
IFRS8 assumes that segment profits
or losses will not include the results of
discontinued operations. However, if a
non-current asset or disposal group has
been classified as held for sale or sold
during the year and has been presented
in a reportable segment, IFRS 5 requires
the reporting segment concerned to
be identified. Reportable segments
profit or loss should be reconciled to the
entitys IFRSprofit or loss before income
tax and discontinued operations unless
the measure of segment profit or loss
provided to the CODM includes such
amounts. (IFRS8.25(b), IFRS 5.41(d))

IFRS 8 Operating segments Implementation guidance

Measurement
If the measurement bases of the
information provided to the CODM differ
from the measurement bases of the
IFRS financial statements, what needs
tohappen?
Reconciliations are required that
separately identify and describe each
adjustment needed to reconcile the total
of all the reportable segments profits
or losses to the consolidated profit or
loss. To the extent that the nature of the
measurement differences is not apparent
from the reconciliations, they must be
explained. (IFRS8.27-28)

Disclosures
Is there an upper limit on the number
of reportable segments that an entity
shoulddisclose?
IFRS8 does not place any limit. However,
it does advise that if the number of
reportable segments identified exceeds
10, an entity should consider whether
a practical limit has been reached.
(IFRS8.19)
If a company has only a single operating
segment, what disclosures, if any, are
required?
If an entity determines that it has only
a single reportable operating segment
then the entity-wide disclosures are still
required. Entity-wide disclosures must be
based on IFRS information and include:

25

 revenues from external customers from

each product or service (or group of
similar products or services)

revenues from external customers

(i) attributed to the entitys country

of domicile, (ii) attributed to an
individual foreign country if material,
and (iii) attributed to all other foreign
countries, together with the basis on
which revenues have been allocated to
different countries

non-current assets (i) located in the

entitys country of domicile, (ii) located

in an individual foreign country if
material, and (iii) located in all other
foreign countries

when it is the case, the fact that the

entity receives more than 10% of its

revenue from a single customer the
total amount of revenues from each
such customer, and the identity of
the operating segment or segments
reporting the revenues. (IFRS8.31-34)

Have the segment information disclosure

requirements in IAS 34 been amended in
the light of IFRS8?
Yes. The disclosures now required in
IAS34 include:

segment revenues from external

total assets of a segment where there

Impairment

a description of any differences from

Is it possible that the adoption of IFRS8

will impact the allocation of goodwill
for impairment testing under IAS 36
Impairment of Assets?

has been a material change from

the amount disclosed in the annual
financial statements

the last annual financial statements

in the basis of segmentation or in the
basis of measurement of segment
profit or loss

a reconciliation of the total of the

reportable segments measures of

profit or loss to the entitys profit
or loss before income tax and
discontinued operations (or, if items
such as income tax are allocated to
segments, to profit or loss after tax).
Material reconciling items must be
separately identified and described.
(IAS 34.16)

Does an entity have to disclose segment

information that may be competitively
harmful?
Yes. IFRS8 does not grant any exemption
from disclosing segment information on
the grounds that it may be competitively
harmful. (IFRS8.BC109-111)
Where an entity changes its measurement
of segment profit or loss, are the
comparatives required to be restated?

a measure of segment profit or loss

IFRS8 requires disclosure of any

changes in measurement methods used
to determine reported segment profit
or loss and the effect, if any, of those
changes on the measure of segment
profit or loss. IAS 1 requires comparative
amounts to be reclassified when the
presentation or classification of items
in the financial statements is amended.
(IFRS8.27,IAS1.38)

26

IFRS 8 Operating segments Implementation guidance

customers and inter-segment revenues,

if included in the measure of profit or
loss provided to the CODM or otherwise
regularly provided to the CODM

Yes. IAS 36 requires goodwill to be

allocated to each cash-generating unit
(CGU) or to groups of CGUs. The relevant
CGU or group of CGUs must represent
the lowest level within the entity at which
the goodwill is monitored for internal
management purposes, and may not
be larger than an operating segment.
Ifdifferent segments are reported under
IFRS8 than were reported under IAS 14,
it follows that there will be differences
between the CGUs that make up an IFRS8
segment and those that made up an
IAS 14 segment. As a result, the CGUs
supporting goodwill may no longer be in
the same segment under IFRS8 as under
IAS 14. This could occur in particular
where goodwill has been allocated to
groups of CGUs at or close to the level of
a segment. It may therefore be necessary
to reallocate goodwill associated with
CGUs that are affected by the change
from IAS 14 to IFRS8. It is possible that
this reallocation of goodwill could expose
CGUs for which the carrying amount,
including the allocated goodwill exceeds
the recoverable amount, thereby giving
rise to an impairment loss.

Example
An entity has a single reportable
segment under IAS 14, consisting of
CGU A and CGU B. Goodwill of 100 is
allocated at the segment level. Following
the implementation of IFRS8, the entity
determines that CGU A and CGU B are
separate reportable segments and that
30 of the goodwill is allocable to CGU
A and 70 to CGU B. An impairment loss
is triggered on the implementation of
IFRS8, as follows:

IAS 14

IFRS8

Number of reportable segments

CGU A

CGU B

Carrying amount (includinggoodwill)

230

100

130

Recoverable amount

280

80

200

Excess of recoverable amount over

carrying amount

50

(20)

70

Impairment loss

Nil

(20)

Nil

Transition
Is there any exemption from restating
comparatives if an entity early adopts
IFRS8?
No, there is no exemption from restating
comparatives if IFRS8 is early adopted.
Comparatives must be restated unless the
necessary information is not available and
the cost to develop it would be excessive,
in which case that fact must be disclosed.
(IFRS8.36)
What if the financial information reviewed
by the CODM changes and/or the entitys
segments change?
If operating segments change, an entity
must restate comparatives in line with
the new operating segments unless the
information is not available and the cost
to develop it would be excessive. The
assessment of whether the information
is not available and the cost to develop it
would be excessive is made on an itemby-item basis, and where comparatives
have not been restated, this fact must

be disclosed. Where an entity is able to

restate only some of the comparative
disclosures, it is required to do so, and
must disclose the items that have not
been restated.
If an entity does not restate comparatives,
the current year disclosures are required
to be made on both the old basis and
new basis of segmentation unless the
information is not available and the
cost to develop it would be excessive.
(IFRS8.2930)
Are there any differences between IFRS8
and SFAS 131 requirements for segment
reporting?
Yes. The differences between IFRS8 and
SFAS 131 Disclosure about Segments of
an Enterprise and Related Information are
highlighted in the Basis of Conclusions of
IFRS8. There are three differences:

SFAS 131 uses the term long-lived

assets rather than non-current assets.

IFRS 8 Operating segments Implementation guidance

The definition of long-lived assets

under US GAAP is interpreted to include
only physical assets, whereas the
definition of non-current assets under
IFRS8 includes intangibleassets.

IFRS8 requires the disclosure

of segment liabilities where this

information is provided to the CODM.
This disclosure is not required by
SFAS131.

SFAS 131 requires an entity with a

matrix form of organisation (e.g., the

CODM reviews information for both
geographic regions and different types
of products or services) to determine its
operating segments based on products
and services. In contrast, IFRS8 does
not prescribe a default position. In such
circumstances an entity is required
to determine operating segments
by reference to the core principle of
IFRS8. (IFRS8.BC60)

27

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