ISCUSSION PROBLEMS

1. Which statement is incorrect regarding reporting b. The absolute amount of its reported profit or loss is
of segment information in accordance with PFRS 8? 10 per cent or more of the greater, in absolute
a. PFRS 8 requires that an entity should disclose amount, of (i) the combined reported profit of all
in f o r m a t i o n t o e n a b l e u s e r s o f it s f in a n c ia l operating segments that did not report a loss and
statements to evaluate the nature and financial (ii) the combined reported loss of all operating
effects of the types of business activities in which it segments that reported a loss.
engages and the economic environments in which c. Its assets are 10 per cent or more of the combined
it operates. assets of all operating segments.
b. P F R S 8 r e q u ir e s e n t it ie s t o r e p o r t s e g m e n t d. Any of these.
information using a "management approach" that
allows the financ ial statement user to review 5. Company A is a listed diversified retail C omp any. It
s e g m e n t i n f o r m a t io n f r o m t h e ' ' e y e s o f t h e has three main types of stores: general department
management." stores, liquor stores and specialist toy stores. Each of
c. PF R S 8 a pp lie s t o t he sep a rat e o r ind iv id u a l these stores has different products, customer types
fina nc ia l sta tem ent s o f a n ent ity ( and t o th e and distribution processes. Company A has identified
consolidated financial statements of a group with a three business segments: general department stores,
parent) whose debt or equity instruments are liquor stores and specialist toy stores.
traded in a public market or that files, or is in the
pro ces s of f ilin g, its ( co ns o lidate d) f ina n cia l All three business units earn most of their revenue
statements with a securities commission or other from external customers. Total consolidated revenue
regulatory organization for the purpose of issuing of Company A is P600 million.
General Toy All
any class of instruments in a public market.
Dept. Liquor stores segments
d. If an entity that is not required to apply PFRS 8 stores stores P5OM P550M
chooses to disclose information about segments Revenue P400M P100M 4m 26M
that does not comply with PFRS 8, it may describe Segment profit 15M 7M
the information as segment information. Assets 900M 200M 100M 1,200M

2. An operating segment is a component of an entity: In its segme nt inf ormat io n, how ma ny reportab le
a. That engages in business activities from which it segments does the company have?
a. T hree c. One
may earn revenues and incur expenses (including
b . Two d. Non e
revenues and expenses relating to transactions
with other components of the same entity).
b. Whose operating results are reviewed regularly by
the entity's chief operating decision maker to make 6. Celine Corporation and its divisions are engaged solely
decisions about resources to be allocated to the in manufacturing. The following data pertain to the
segment and assess its performance. industries in which operations were conducted for the
current year:
c. For which discrete financial information is
available. Operating Profit (Loss)
d. A ll o f t h e a b o v e , Division A P30,000,000
B 10,000,000
3. Which statement is incorrect regarding the term 'chief C ( 8,000,000)
operating decision maker (CODM)'? D ( 2,000,000)
a. The term identifies a function, not necessarily a E 5,000,000
manager with a specific title. I n it s c u r r e n t y e a r f in a n c ia l s t a t e m e n t s , C e l i n e
b. The function of the CODM is to allocate resources Corporation should disclose an operating segment if
to and assess the performance of the operating operating profit or loss is at least
segments of an entity. a. P 1, 00 0, 0 0 0 c. P4,5 00, 000
c. Often the CODM of an entity is its chief executive b. P 3, 50 0, 0 0 0 d. P5,500,000
officer or chief operating officer but, for example, it ,

may be a group of executive directors or others. 7. Rainee Corporation's revenue for the current year
were as follows:
d. N on e o f t he ab ov e.
Consolidated revenue per income P1,200,000
4. An entity shall report separately information about an statement
operating segment that meets which of the following Intersegment sales 180,000
quantitative thresholds? Intersegment transfers 60,000
a . I t s re p o rt ed r ev e n u e, in c lu d in g b o t h s a le s t o Combined revenues of all operating
external customers and intersegment sales or segments 1,440 000
transfers, is 10 per cent or more of the combined
revenue, internal and external, of all operating Rainee has a reportable segment if operating
segments. segment's revenues is at least
a. P144,000, c. P24,000
b . P120,000 d. P 6,000