Objective and scope What is cash?

Chapter 22 – Operating Segments Page 320 The reportable segments are: Business type internal external total Notes 1 40 40 reportable segment because 40 total 10 threshold test 2 20 20 reportable segment because 20 total 10 threshold test 3 12 6 18 reportable segment because 18 total 10 threshold test 4 5 5 10 reportable segment because 10 total = 10 threshold test 5 7 7 not reportable 7 total 10 threshold 6 5 5 not reportable 5 total 10 threshold 17 83 100 Note that the external revenue of segments reportable under the 10 test represents 71 40 + 20 + 6 + 5 out of the 83 percentage points which comprise external sales. They therefore represent 85.5 of external revenue and no additional segments needed to be reported under the “75 rule”. 4.4 What has to be reported? The purpose of disclosing segmental information is to provide additional information to the users of the financial statements so that they will be able to evaluate the nature and financial effects of an entity’s business activities as well as the economic environment in which it operates. [IFRS 8.20] IFRS 8 requires the disclosure of general information, such as the type of products and services from which each reportable segment generates its revenue along with factors that have been used by management to identify its reportable segments. A measure of profit or loss and total assets should be disclosed for each reportable segment. Segment liabilities are only required to be disclosed if this information is regularly provided for internal reporting purposes. Specified components of the operating segment’s profit or loss and segment assets are also required to be disclosed where such information is regularly provided to the chief operating decision maker. A number of reconciliations should be provided in relation to the total of segment revenues, reported segment profit or loss, segment assets and liabilities and other material items, to corresponding items in the entity’s financial statements. Chapter 22 – Operating Segments Page 321 Illustration 2 An entity’s household goods division has been identified as a reportable operating segment. The items of financial information regularly provided for review by the chief operating decision maker and those which should, at a minimum, be disclosed under IFRS 8 are as follows. Year ended 31 December 2007 CUmillion Minimum disclosure Revenues External customers 50 Yes Internal customer 15 Yes Total 65 No Raw materials consumed 8 No Change in finished goods inventories 11 No Employee benefits expense 9 No Depreciationamortisation 2 Yes Impairment losses 7 Yes Administrative expenses 4 No Allowance for doubtful receivables 1 No Selling and distribution expenses 12 No Profitloss 11 Yes Total assets 60 Yes Additions to non-current assets 8 Yes Carrying amount of non-current assets disposed of 5 No Note that only the amounts for profitloss and total assets are to be disclosed in all circumstances. All the other items marked for disclosure are specified in IFRS 8.23 and 8.24 as being disclosed only because they are included in the measure of profitloss and the total assets reviewed by the chief operating decision maker. Impairment losses are disclosed because they are non-cash items other than depreciation amortisation and their amount is deemed to be material. Where there have been changes in the internal structure of an entity that have led to corresponding changes in the reportable segments, comparative segment information should be restated to reflect this change where it is practicable to do so. If changes to the internal structure lead to a change in the identification of segments and the comparative segments have not been restated because it is not practicable to do so, then the old and new segment basis should both be reported for the year in which the change takes place. This is to ensure that useful comparisons can still take place.

4.5 Additional disclosures

Entities may operate and be managed in a number of different ways which may lead to key information not being reported as part of an entity’s operating segment disclosures. IFRS 8 therefore sets out additional information that is required to be disclosed by all entities, including those that have a single operating segment, that are within its scope. The following additional information is only required if such information has not been provided already by the entity as part of its reportable segment information:  revenue from external customers for each individual, or group of similar, products and services. This information is not required if it is not readily available and the cost to provide such information would be excessive, but this fact should be disclosed;