F2 - M5 - Segment Reporting

Question 1

Segment Reporting

Answer 1

better understand entity performance, prospects for future cash flows, informed judgements about entity as a whole

• IFRS requires disclosure of segment liabilities

Question 2

Required disclosures all PUBLIC entities

Answer 2

• Operating segments
• Products and services
• Geographic areas
• Major customers

Question 3

Operating segments

Answer 3

o Engages in business activities, operating results “regularly” reviewed, discrete financial info available

o Traceable cash flows

o Corporate Headquarters * Pension Plan NOT an operating segment

o Reportable Segments – meet criteria for separate reporting. OS exhibit similar long term financial performance into a single segment
 Nature of the products and services
 Nature of the production processes
 Type of class of customer for their products and services
 The methods used to distribute their products
 If applicable, nature of regulatory environment

o	Quantitative Thresholds for Reportable Segments
	      10 Percent Size Test 
•	Revenue 
•	Reported Profit or Loss
•	Assets
•	75% “Reporting Sufficiency” Test

o	If total < 75%, need more segments
	     “All Other Segments” Category
•	Not 10%, Already showing over 75%
	     Comparative Reporting – Management judges
	     Segment Profit (or Loss) Defined

Question 4

Intercompany transactions

Answer 4

Intercompany transactions NOT eliminated for reporting

Question 5

Reportable Segment Disclosures

Answer 5

• Identifying Factors – Products / services, geographic areas, regulatory environments
• Products and Services – derives revenues
• Profit and Loss
  o Revenues from external customers
  o Revenues from transactions with other internal operating segments
  o Interest expense
  o Depreciation, depletion and amortization
  o Unusual items, unusual events and transactions
  o Equity in net income of investees accounted for by the equity method
• Assets – amount of investment in equity method investees
• Total expenditures
• Liabilities – IFRS Only
• Measurement criteria
• Reconciliations

Question 6

Entity Wide Disclosures

Answer 6

• Products and services
• Geographic areas
  o Revenues
   Domicile country
   All foreign countries
   Individual foreign counties
  o Long Lived Assets
   Domicile country