CFAS operating activities, financial results, forecasts, or

plans for the segment.

OPERATING SEGMENTS
• The chief operating decision maker may also be the
2 form of management: segment manager for some operating segments
• A single manager may be the segment manager for
Centralized – one decision-maker more than one operating segment.
Decentralized – the authority and responsibility is delegated to AGGREGATION OF TWO OR MORE OPERATING
small units SEGMENTS INTO ONE
• The standard governing operating segments is IFRS 8 • Two or more operating segments may be aggregated
• Operating Segments require an entity whose debt or into a single operating segment if:
equity securities are publicly traded to disclose o Aggregation is consistent with the core principle
information to enable users of its financial statements of IFRS 8;
to evaluate the nature and financial effects of the o The segment has similar economic
different business activities in which it engages and the characteristics: and
different economic environments in which it operates. o The segments are similar in each of the following
SCOPE respects:
▪ The nature of the products and services;
• IFRS 8 applies to the separate or individual financial ▪ The nature of the production processes;
statements of an entity (and to the consolidated ▪ The type or class of customer for their
financial statements of a group with a parent): products and services;
o Whose debt or equity instrument are traded in a ▪ The methods used to distribute their
public market, or products or provide their services; and
o That files, or is in the process of filling, its ▪ If applicable the nature of the regulatory
(consolidated) financial statements with a environment (e.g. banking, insurance, or
securities commission or other regulatory public utilities)
organization for the purpose of issuing any class
IDENTIFYING REPORTABLE SEGMENTS
of instruments in a public market.
• If a financial report contains both the consolidated • IFRS 8 requires an entity to report financial and
financial statements of a parent that is within the scope descriptive information about its reportable segments.
of this IFRS as well as the parent’s separate financial • Reportable segments are operating segments or
statements, segment information is required only in aggregations of operating segments that meet
the consolidated financial statements. specified criteria:
WHAT IS OPERATING SEGMENTS? o Its reported revenue, including both sales to
external customers and intersegment sales or
• An operating segment is a component of an entity: transfers, is 10% or more of the combined
o That engages business activities from which it revenue, internal and external, of all operating
may earn revenues and incur expenses. segments.
o Whose operating by the entity’s chief operating o The absolute measure pf its reported profit or
decision maker to make decisions about loss is 10% or more of the greater, in absolute
resources to be allocated to he segment and amount of
assess its performance, and I. The combined reported profit of all
o For which discrete financial information I operating segments that did not report a loss
available. and
• A component is not excluded from being an operating II. The combined reported loss of all operating
segment even if its sole purpose is to sell products or segments that reported a loss
services internally to other components of the o Its assets are 10% or more of the combined assets
enterprise. of all operating segments.
• Reportable segment is an operating segment for • Operating segments that do not meet any of the
which segment information is required to be quantitative thresholds may be considered reportable,
disclosed. and separately disclosed if management believes that
information about the segment would be useful to
users of the financial statements (IFRS 8)
CHIEF OF OPERATING DECISION MAKER’S • An entity may combine information about operating
FUNCTION IS TO: segments that do not meet the quantitative thresholds
with information about other operating segments that
• Allocate resources do not meet the quantitative thresholds to produce a
• Assess the performance of the operating segments of reportable segment only if the operating segments
the entity have similar economic characteristics and share
• Often, he is chief executive officer of chief operating majority of the aggregation criteria. (IFRS 8)
officer • If the total external revenue reported by operating
segments constitutes less than 75% of the entity’s
revenue, additional operating segment shall be
OPERATING SEGMENT identified as reportable segments until at least 75% of
the entity’s revenue is included in reportable segment.
• Generally, an operating segment manager who is
directly accountable to and maintains regular contact
with the chief operating decision-maker to discuss
 • material non-cash items other than depreciation and
amortization

RECONCILIATIONS

An entity shall provide reconciliations of all of the following:

• the total of the reportable segment’s revenues to the

entity’s revenue
• the total of the reportable segment’s measures of profit
or loss to the entity’s profit or loss before tax expense
(tax income) and discontinued operations.
OPERATING SEGMENTS: DISCLOSURE • The total of the reportable segments’ liabilities to the
entity’s liabilities
This can be classified into four categories: • the total of the reportable segments’ assets to the
entity’s assets
• General information
• the total of the reportable segments’ amount for every
• Information about profit or loss, assets and liabilities
other material item of intermission disclosed the
• Reconciliations
corresponding amount for the entity.
• Entity-wide disclosures
RESTATEMENT OF PREVIOUSLY REPORTED
DISCLOSURE
INFORMATION
• An entity shall disclose information to enable users of
• If an entity changes the structure of its internal
its financial statements to evaluate the nature and
organization in a manner that causes the composition
financial effects of the business activities in which it
of its reportable segments to change, the
engages and the economic environments in which it
corresponding information for earlier periods,
operates.
including interim periods, should be restated unless
REQUIRED DISCLOSURES the information is not available and the cost to develop
it would be excessive.
An entity shall disclose the following for each period for which
a statement of comprehensive income is presented: ENTITY-WIDE DISCLOSURES

• General information An entity shall disclose information about the following:

• Information about reported segment profit or loss,
• Information about products and services
including specified revenues and expenses included in
• Information about geographical areas
reported segment profit or loss, segment assets, segmet
• Information about major customers
liabilities and the basis of measurement; and
• Reconciliations of the totals of segment revenue, QUESTIONS:
reported segment profit or loss, segment assets,
segment liabilities and other material segment items to 1. If financial report contains both the consolidated
corresponding entity amounts. financial statements of a parent and the parents
separate financial statements, segment information is
GENERAL INFORMATION required in - the consolidated financial statement only
2. Which statement is falls with respect to and chief
An entity shall disclose the following general information:
operating decision maker? B
• Factors used to identify the entity’s reportable A. The term chief operating decision maker
segments, including the basis of organization; identifies a function and not necessarily a
• The judgments made by management in applying the manager with a specific title
aggregation criteria; and B. in some cases, the chief operating decision maker
• Types of products and services from which each could be the chief operating officer
reportable segment derives its revenues. C. The board of directors acting collectively could
qualify as the chief operating decision maker
INFORMATION ABOUT REPORTED SEGMENT D. the chief internal auditor who reports to the board
PROFIT OR LOSS of directors usually plays a very important role
and would generally qualify as chief operating
An entity shall also disclose the following about each reportable
decision maker.
segment if the specified amounts are included in the measure of
3. When is an operating segment is reportable? D
segment profit or loss reviewed by the chief operating decision
A. The segment's external and Internal Revenue is 10%
maker, or otherwise regularly provided to the cheap or anything
or more of the combined external and Internal
decision maker, even if not included in that measure of segment
Revenue of all operating segments.
profit or loss:
B. The segment profit or loss is 10% or more of the
• revenues from external customers greater between the combined profit of all profitable
• revenues from transactions with other operating operating segments and the combined loss of all
segments of the same entity unprofitable operating segments.
• interest revenue C. The assets of this segment are 10% or more of the total
• interest expense assets of all operating segments.
• depreciation and amortization D. Under all of these circumstances
4. Operating segments that do not meet any of the
• material items of income and expense
quantitative thresholds
• the entity’s interest in the profit or loss of associates
A. cannot be considered reportable
and joint ventures accounted for by the equity method
• income tax expense or income
B. may be considered reportable and separately disclosed A. Major customers
if management believes that information about the B. segment assets and liabilities
segment would be useful to the users of the financial C. liquidity ratios
statements D. segment profits and loss unrelated information
C. may be considered reportable if the information is for 11. the sum of the reportable segments external sales
the internal use only must be at least equal to what percent of
D. may be considered reportable and separately disclosed
total operating segments’ external sales?
if this is the practice within the economic environment
in which the entity operates A. 60%
5. Which is true concerning the 75% overall size test B. 75%
for operating segments? C. 50%
A. The total external and Internal Revenue of all D. 65%
reportable segments is 75% are more of the entity’s 12. under PFRS 8, the management approach of the
external revenue identifying reportable operating segments means
B. The total external revenue of quarter portable that operating segments are identified on the basis
segments is 75% or more of the entity’s consolidated of internal reports about the components of an
revenues entity that are regularly reviewed by:
C. the total external revenue of all reportable segments is A. the chief accountant
75% or more of the entity's unconsolidated revenues B. the chief audit executive
D. total Internal Revenue of all reportable segments with C. the chief operating decision maker
75% or more of the entity’s Internal Revenue D. the respective head of each operating segment
6. which of the following statements about major
customer disclosure is true? INTERIM FINANCIAL REPORTING – IAS 34
A. A major customer is defined as one providing revenue
Objectives of IAS 34:
which amounts to 10% I am more of the combined
external revenue of all operating segments. • The objective of this standard is to prescribe the
B. The identities of major customers need not to be minimum content of an interim financial report and to
disclosed prescribe the principle for recognition and
C. the entity shall disclose the total amount of revenue measurement and complete our condensed financial
from major customer and the identity of the segment statements for an interim period.
reporting the revenue • Timely and reliable interim financial reporting
D. all of these statements are through about major improves the ability of investors, creditors, and others
customer disclosure to understand the entity’s capacity to generate earnings
7. under PFRS 8, which is not a required and cash flows and its financial condition and
reconciliation of segment information? liquidity.
A. The total of the reportable segments’ revenue to the
entity’s revenue
B. The total of the reportable segments’ the profit or loss WHAT IS INTERIM FINANCIAL REPORTS
to the entity’s profit or loss before tax expense and
discounted operations • Interim financial reports are financial statements
C. The total number of major customers of all segments covering periods of less than a full financial year
to the total number of major customers of the entity • Interim financial report means a financial report
D. the total of the reportable segments’ assets to the containing either a complete set of financial statements
entity’s assets (IAS 1) or a set of condensed financial statements for
8. Quantitative threshold is not a requirement in an interim period.
qualifying reportable segment? • The purpose of an interim financial report is to provide
A. The segment revenue, both external and internal, is financial statement users with more timely
10% or more of the combined external and Internal information for making investments and credit
Revenue of all operating segments. decisions
B. The segment profit or loss is 10% or more the greater • Additionally, interim reports can yield significant
between the combined profit or profitable segments information concerning trends affecting the business
and combined loss of unprofitable segments. and seasonality effects, both of which could be
C. The segment assets are that percent or more of the obscured in annual reports.
combined assets of all operating segments. • Each financial report, annual or interim, is evaluated
D. The segment asset are down the percent or more of the on its own for conformity to IFRSs.
combined assets of all operating segments. • The fact that an entity ay not have provided interim
9. Which of the following is not a required disclosure financial reports during a particular financial year or
about operating segments? may have provided interim financial reports that do
A. The total of revenue from major external customers not comply with this standard does not prevent the
exceeding 50% of the entities revenue entity’s annual financial statements form conforming
B. the entity of the major customer that accounts for 20% to IFRSs.
of the entity’s revenue
C. revenue from external customers attributable to the WHO AND WHEN?
entity’s country of domicile and attributed to all
AS PER STANDARD
foreign countries in total from which the entity derives
revenue. • IAS 34 does not mandate which entities should be
D. Revenue from external customers for each product and required to publish interim financial reports, how
service. frequently, or how soon after the end of an interim
10. PFRS 8 (operating segments) requires that the period.
company report all of the following except.
 • The international accounting standards committee statement of financial position as of the end of
encourages publicly traded entities to provide interim the immediately preceding financial year.
financial reports that conform to the recognition, • CONDENSED STATEMENTS OF PROFIT OR
measurement, and disclosure principles set out in IAS LOSS AND OTHER COMPREHENSIVE
34. INCOME
• Specifically, publicly traded entities are encouraged: o Statements of profit or loss and other
a. to provide interim financial reports at least as of the comprehensive income for the current interim
end of the first half of their financial year; and period and cumulatively for current financial
b. to make their interim financial reports available not year to date, with comparative statements of
later than 60 days after the end of the interim period. profit or loss and other comprehensive income
for the comparable interim periods (current and
PHILIPPINE SETTINGS year to date) of the immediately preceding
• The Securities and Exchange Commissions and financial year.
Philippines Stock Exchange requires entities to submit • CONDENSED STATEMENT OF CHANGES IN
a quarterly report on SEC Form 17-Q forty-five (45) EQUITY
days after the end of each of the first 3 quarters of each o statement of changes in equity cumulatively for
fiscal year. (SRC Rule 17) the current financial year to date, with a
comparative statement for the comparable year
IAS 1 – COMPLETE SET IAS 34 – CONDENSED to date period of the immediately preceding
OF FS SET OF FS financial year.
• Statement of • Condensed • CONDENSED STATEMENT OF CASH FLOW
financial position statement of
o Statement of cash flows commutatively for the
financial position
• Statement of profit • Condensed current financial year to date, with a comparative
or loss and other statement of profit statement for the comparable year to date of the
comprehensive or loss and other immediately preceding financial year.
income comprehensive
income SIGNIFICANT EVENTS AND TRANSACTIONS
• Statement of • Condensed
changes in equity statement of • An entity shall include in its interim financial report an
changes in equity explanation of events at transactions that are
• Statement of cash • Condensed significant to an understanding of the changes in
flow statement of cash financial position and performance of the entity since
flow the end of the last annual reporting period.
• Notes (5.a) • Selected • A user of an entity’s interim financial report will have
Comparative explanatory notes access to the most recent annual financial report of that
information
entity
• Additional
statement if • Therefore, it is unnecessary for the notes to an interim
financial position financial report to provide relatively insignificant
(required only updates to the information that was reported in the
when certain notes in the most recent annual financial report
instances occur)
SELECTED EXPLANATORY NOTES:

CONDENSED SET OF INTERIM FINANCIAL • Write down of inventories to net realizable value and
REPORTS reversal thereof
• impairment losses and reversal thereof
• They shall include, at a minimum call mark condensed
• reversal of provision for restructuring costs
interim financial statements include each of the
• acquisition and disposal of PPE, including purchase
headings and subtotals that were included in the
commitments
entity’s most recent annual financial statements and
• litigation settlements
the selected explanatory notes required by IAS 34.
• corrections of a prior period errors
• Additional line items or notes are provided if their
• business or economic circumstances affecting the fair
omission makes the condensed financial statements
value of financial assets and financial liabilities
misleading.
• unremedied loan default or breach of loan agreement
• In a statement that presents the components of graffiti
or loss for an interim period, an education represent • related party transactions
basic and diluted earnings per share for that. When the • transfers between levels of the fair value hierarchy
entity is within the scope of IAS 33 earnings per share. used in measuring the fair value of financial
• An interim financial report is prepared on a instruments
consolidated basis if the entities most recent annual • changes in the classification of financial assets
financial statements were consolidated statements. • changes in the tangent liabilities

Periods for which interim financial statements are required OTHER DISCLOSURES
to be presented:
The following are also disclosed in the interim financial
• CONDENSED STATEMENT OF FINANCIAL report:
POSITION
• statement that the same accounting policies were used
o Statement of financial position as of the end of
in the interim financial statements as those used in the
the current interim period and a comparative
latest annual financial statements. If there have been
changes, those changes are disclosed.
 • Explanation of seasonality or cyclicality of interim annual reporting and no special interim after was or
operations the federals are permitted.
• Unusual items affecting the financial statement • In other words, annual operating expenses are
elements recognized in the interim period In which they are
• changes in accounting estimates incurred, irrespective of the number of interim periods
• issuance and settlements of debt and equity securities benefited, unless deferral or accrual would be allowed
• Dividends paid in the annual financial statements.
• segment information (if the entity is covered by IFRS 2. Integral view –
8) • Annual operating expenses are estimated and then
• events after the reporting period allocated to the interim periods based on forecasted
• Changes in the composition of the entity, e.g., business revenue or sales volume.
combinations, obtaining or losing control of • In other words, costs incurred which clearly benefit the
subsidiaries, restructurings, and discontinued entire year are allocated to the interim periods based
operations. on forecasted revenue or sales volume.
• Disclosures on the fair value of financial instruments • When this approach is followed, the results of
• disclosures required by IFRS 12 when the entity subsequent interim periods must be adjusted to reflect
becomes or ceases to be an investment property prior estimation errors.
• Disaggregation of revenue from contracts with IAS 34 provides the following accounting principles:
customers as required IFRS 15
• the entity presents basic and diluted earnings per share 1. losses from inventory write downs, restructuring, or
if the entity is within the scope of IAS 33 impairment in an interim period Are accounted for in
the same way as in annual financial statements (i.e.,
Disclosures of compliance with IFRSs losses are recognized immediately in the interim
period in which they arise). The original estimate is
• If an entity’s interim financial report is in compliance
adjusted by accruing an additional loss verbally
with IAS 34, that fact shall be disclosed.
reversing a previously recognized loss, if there are
• An interim financial report shall not be described as
subsequent changes in estimates. Financial statements
complying with IFRSs unless it complies with all the
and previous interim periods are not restated
requirements of IFRSs.
2. A cost that does not qualify as an asset in an interim
Materiality period is not deferred either to wait if it qualifies in the
next period or to smooth earnings over the interim
Materiality shall be assessed in relation to the interim period periods Within a financial year. A liability at the end of
financial data. In making assessments of materiality, it shall be the interim period must meet all the recognition
recognized that the interim measurements may rely on criteria at that date, just as it must at the end of the
estimates to a greater extent that measurements of annual annual reporting period.
financial data. 3. Income tax expenses In interim periods are based on
The overriding goal is to ensure that an interim financial report the best estimate of the weighted average annual
includes all information that is relevant to understanding an income tax rate expected for the full financial year.
entity’s financial position and performance during their interim The recognition principles of assets, liabilities, income
period. and expenses under the conceptual framework are
applied in the interim period in the same way as in the
Disclosure in annual financial statements annual period. Thus, items that do not qualify as assets,
liabilities, income or expenses in the annual period do
If and estimate of an amount reported in an interim period S
not also qualify as such in the interim period.
change significantly during the final interim final period of the
financial year but a separate financial report is not published for Revenues received seasonally cyclically or occasionally
the final interim period, the nature and amount of that change
in estimate shall be disclosed in a note to the annual financial • Revenues that are received seasonally cyclically or
statement for the financial year. occasionally (E.G., dividends revenue, royalties,
government grants, or season revenues of retailers)
Recognition and measurement Within a financial year shall not be anticipated or
deferred as of an interim date if anticipation or deferral
an entity shall apply the same accounting policies in its interim
would not be appropriate at the end of the entity’s
financial statements as are applied in its annual financial
financial year.
statements, except for accounting policy changes after the date
• Revenues are recognized when they are earned during
of the most recent annual financial statements that are to be
the interim period they occurred.
reflected in the next annual financial statements. However, the
• Examples include dividend revenue. Royalties, and
frequency of entity’s reporting (annual, semi annual, or
government grants.
quarterly) shall not affect the measurement of its annual results.
Measurements for interim reporting purposes shall be made on • Some entities consistently earn more revenue in
a year to date basis. certain interim periods of a financial year than in other
interim periods, for example, seasonal revenues of
Two point of views In interim reporting: retailers. Such revenues are recognized when they
occur.
1. Discrete view – INDEPENDENT
• Each interim period it's considered a discrete or Costs incurred unevenly during the financial year / COST
separate accounting. With status equal to fiscal year. AND EXPENSES
• Thus, no estimations or allocations are made for
• Costs that are incurred unevenly during an entity’s
interim purposes, unless such estimations or
financial year shall be anticipated or deferred for an
allocations are allowed for annually reporting. The
interim reporting purposes if, and only if, it is also
same expense recognition rules shall apply asunder
 appropriate to anticipate or defer that type of cost at d. None of the above
the end of the financial year.
• Companies that use a periodic inventory system may 2. what does the international accounting standards
adapt inventory estimation method (gross profit or committee encouraged publicly traded entities to
retail method) to determine cost of goods sold during do? B
the interim period. a. To provide interim financial report at least as of the
• The principles for recognizing and measuring losses end of the first quarter of their financial year
from inventory write-downs, restructurings, or b. To make their interim financial reports available not
impairment in interim periods are the same as those later than 60 days after the end of the interim.
that an entity would follow if it prepared only annual c. Apply the same accounting policies in its interim
financial statements. report as are applied in its annual financial statements,
• Income tax expense is recognized in each interim including accounting policy changes made after the
period based on the best estimate of the weighted date of the most recent annual financial statements that
average annual income tax rate expected for the full are to be reflected in the next annual financial
financial year statements
• A bonus is anticipated and recognized for interim d. All of the above
reporting purposes if and only if (a) the bonus is a legal
obligation or constructive obligation, and a reliable 3. Interim financial report means a financial
estimate of the obligation can be made. reporting containing ____ for an interim period. E
• Depreciation and amortization for an interim. Should a. A complete set of financial statements
be based only on assets owned during the interim b. An adjusted set of financial statements
period. c. A set of condensed financial statements
• Asset acquisitions or dispositions planned for later in d. A or B
the financial year shall not be taken into account. e. A or C
4. which of the following is true with regards to the
• Paid vacation and holiday leave shall be accrued for
disclosure of compliance with IFRS provided in IAS
interim purposes because there are enforceable as legal
34? C
commitments.
A. If an entity's interim financial report is not in
• Gains are losses from disposal of property, gains and
compliance with IAS 34, that fact shall be disclosed
losses from discontinued operation now their gains or
B. An interim financial report should not be described as
losses shall not be allocated over the interim periods.
complying with IFRS unless it complies with all the
The gains shall be reported in the interim. In which
requirements of IAS 34
they are realized and the losses are reported in the
C. An interim financial report shall not be disclosed as
interim period in which they are incurred.
complying with IFRS unless it complies with all the
Use of estimates requirement of IFRSs
D. A and B
while measurements in both annual and interim financial
reports are based on reasonable estimates, the preparation of 5. If an entity does not prepare interim financial
interim financial reports are generally will require greater use reports, C
of estimation methods that annual financial reports. A. It's final financial statement would not conform to the
The statement of previously reported interim periods IRS
B. It's another financial statements should not be
a change in accounting policy, other than one for which the described to have been prepared in accordance with
transition is specified by the new IRS, shall be reflected by: IFRS
C. The conformance of its annual financial statements
a. Retrospectively - restating the financial statements of
with the IFRSs is not affected
the prior interim periods of the current financial year
D. A and B
and the comparable interim periods of any prior
financial years that will be restated in accordance with
IAS 8;
b. Prospectively - when it is impracticable to determine
the cumulative effect at the beginning of the financial
year of applying a new accounting policy to all prior
periods, adjusting the financial statements of prior
interim periods of the current financial year, and
comparable interim periods of prior financial years to
apply the new accounting policy prospectively from
the earliest date practicable.

Questions:

1. which of the following is not an objective of IES 34?

B
a. To prescribe the minimum content of an interim
financial report
b. To prescribe which entities are required to publish
interim financial reports, how frequently and how
soon after the end of the reporting period.
c. The prescribed the principles of recognition and
measurement incomplete or condensed financial
statements for an interim period.