IFRS 8 — Operating Segments

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Overview

IFRS 8 Operating Segments requires par­tic­u­lar classes of entities (es­sen­tially those with publicly traded se­cu­ri­ties) to disclose in­for­ma­tion about their operating segments, products
and services, the ge­o­graph­i­cal areas in which they operate, and their major customers. In­for­ma­tion is based on internal man­age­ment reports, both in the iden­ti­fi­ca­tion of operating
segments and mea­sure­ment of disclosed segment in­for­ma­tion.

IFRS 8 was issued in November 2006 and applies to annual periods beginning on or after 1 January 2009.

History of IFRS 8
Date De­vel­op­ment Comments
19 January 2006 ED 8 Operating Segments issued Comment deadline 19 May 2006. (IASB press release
(https://www.iasplus.com/en/news/2006/January/news2701) (https://www.iasplus.com/en/binary/pressrel/0601ed8pr.p
30 November 2006 IFRS 8 Operating Segments issued Effective for annual periods beginning on or after 1 January
(https://www.iasplus.com/en/news/2006/November/news2950) 2009, su­per­sed­ing IAS 14
(https://www.iasplus.com/en/standards/ias/ias14) Segme
Reporting
16 April 2009 Amended by Annual Im­prove­ments to IFRSs 2009 Effective for annual periods beginning on or after 1 January
(https://www.iasplus.com/en/news/2009/April/news4603) (https://www.iasplus.com/en/projects/completed/aip/annual-2010
improvements-2008-2010) (dis­clo­sures of segment assets)
18 July 2013 (https://www.iasplus.com/en/news/2013/07/iasb- Report and Feedback Statement Post-im­ple­men­ta­tion Areas for potential im­prove­ment and amendment will be co
completes-pir-ifrs8) Review: IFRS 8 Operating Segments published sid­ered through the IASB's normal processes
12 December 2013 Amended by Annual Im­prove­ments to IFRSs 2010–2012 Effective for annual periods beginning on or after 1 July 20
(https://www.iasplus.com/en/news/2013/12/aip-2010-2012) Cycle
(https://www.iasplus.com/en/projects/completed/aip/annual-
improvements-2010-2012) (ag­gre­ga­tion of operating seg‐
ments, rec­on­cil­i­a­tions of assets)
Related In­ter­pre­ta­tions
None

Amend­ments under con­sid­er­a­tion by IASB

Deloitte resources
Special edition newslet­ter

Deloitte has published a Special edition IAS Plus newslet­ter (https://www.iasplus.com/en/publications/global/ifrs-in-focus/2006/ifrs-8) ex­plain­ing the re­quire­ments of IFRS 8 and what
has changed from IAS 14 (https://www.iasplus.com/en/standards/ias/ias14) Segment Reporting.

Summary of IFRS 8

Scope

IFRS 8 applies to the separate or in­di­vid­ual financial state­ments of an entity (and to the con­sol­i­dated financial state­ments of a group with a parent):

whose debt or equity in­stru­ments are traded in a public market or

that files, or is in the process of filing, its (con­sol­i­dated) financial state­ments with a se­cu­ri­ties com­mis­sion or other reg­u­la­tory organisation for the purpose of issuing any class
of in­stru­ments in a public market [IFRS 8.2]

However, when both separate and con­sol­i­dated financial state­ments for the parent are presented in a single financial report, segment in­for­ma­tion need be presented only on the basis
of the con­sol­i­dated financial state­ments [IFRS 8.4]

Operating segments

IFRS 8 defines an operating segment as follows. An operating segment is a component of an entity: [IFRS 8.2]

that engages in business ac­tiv­i­ties from which it may earn revenues and incur expenses (including revenues and expenses relating to trans­ac­tions with other com­po­nents of
the same entity)

whose operating results are reviewed regularly by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its
per­for­mance and

for which discrete financial in­for­ma­tion is available

Re­portable segments

IFRS 8 requires an entity to report financial and de­scrip­tive in­for­ma­tion about its re­portable segments. Re­portable segments are operating segments or ag­gre­ga­tions of operating seg‐
ments that meet specified criteria: [IFRS 8.13]

its reported revenue, from both external customers and in­ter­seg­ment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating
segments, or

the absolute measure of its reported profit or loss is 10 per cent or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that
did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss, or

its assets are 10 per cent or more of the combined assets of all operating segments.

Two or more operating segments may be ag­gre­gated into a single operating segment if ag­gre­ga­tion is con­sis­tent with the core prin­ci­ples of the standard, the segments have similar
economic char­ac­ter­is­tics and are similar in various pre­scribed respects. [IFRS 8.12]
If the total external revenue reported by operating segments con­sti­tutes less than 75 per cent of the entity's revenue, ad­di­tional operating segments must be iden­ti­fied as re­portable
segments (even if they do not meet the quan­ti­ta­tive thresh­olds set out above) until at least 75 per cent of the entity's revenue is included in re­portable segments. [IFRS 8.15]

Dis­clo­sure re­quire­ments

Required dis­clo­sures include:

general in­for­ma­tion about how the entity iden­ti­fied its operating segments and the types of products and services from which each operating segment derives its revenues
[IFRS 8.22]

judge­ments made by man­age­ment in applying the ag­gre­ga­tion criteria to allow two or more operating segments to be ag­gre­gated [IFRS 8.22(aa)]#

in­for­ma­tion about the profit or loss for each re­portable segment, including certain specified revenues* and expenses* such as revenue from external customers and from
trans­ac­tions with other segments, interest revenue and expense, de­pre­ci­a­tion and amor­ti­sa­tion, income tax expense or income and material non-cash items [IFRS 8.21(b) and
23]

a measure of total assets* and total li­a­bil­i­ties* for each re­portable segment, and the amount of in­vest­ments in as­so­ci­ates and joint ventures and the amounts of additions to
certain non-cur­rent assets ('capital ex­pen­di­ture') [IFRS 8.23-24]

an ex­pla­na­tion of the mea­sure­ments of segment profit or loss, segment assets and segment li­a­bil­i­ties, including certain minimum dis­clo­sures, e.g. how trans­ac­tions between
segments are measured, the nature of mea­sure­ment dif­fer­ences between segment in­for­ma­tion and other in­for­ma­tion included in the financial state­ments, and asym­met­ri­cal
al­lo­ca­tions to re­portable segments [IFRS 8.27]

rec­on­cil­i­a­tions of the totals of segment revenues, reported segment profit or loss, segment assets*, segment li­a­bil­i­ties* and other material items to cor­re­spond­ing items in the
entity's financial state­ments [IFRS 8.21(b) and 28]

some en­tity-wide dis­clo­sures that are required even when an entity has only one re­portable segment, including in­for­ma­tion about each product and service or groups of prod‐
ucts and services [IFRS 8.32]

analyses of revenues and certain non-cur­rent assets by ge­o­graph­i­cal area – with an expanded re­quire­ment to disclose revenues/assets by in­di­vid­ual foreign country (if mate‐
rial), ir­re­spec­tive of the iden­ti­fi­ca­tion of operating segments [IFRS 8.33]

in­for­ma­tion about trans­ac­tions with major customers [IFRS 8.34]

# This dis­clo­sure re­quire­ment was added by Annual Im­prove­ments to IFRSs 2010–2012 Cycle, effective for annual periods beginning on or after 1 July 2014.

* This dis­clo­sure is required only if such amounts are regularly provided to the chief operating decision maker, or in the case of specific items of revenue and expense or as­set-re­‐
lated items, if those specified amounts are included in the relevant measure (segment profit or loss or segment assets).

Con­sid­er­able segment in­for­ma­tion is required at interim reporting dates by IAS 34 (https://www.iasplus.com/en/standards/ias/ias34).

Remaining dif­fer­ences with US GAAP

The remaining dif­fer­ences with US GAAP (SFAS 131) are listed in IFRS 8.​BC60.

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