Operating Segments

Question 1

How is an operating segment defined?

Answer 1

Component of an entity which;

• engages in business activities from which it may earn revenue and incur expenses
• results are regularly reviewed by CODM
• for which discrete financial information is available

Question 2

What are the thresholds for a reportable segment?

Answer 2

• more than 10% of revenue (internal and external) or;
• more than 10% of Assets or;
• segments in profit (or if greater segments in loss)

Check if total external revenue of reportable segments if more than 75% of total revenue

Question 3

What is the criteria for aggregation?

Answer 3

Only if they have similar economics characteristics AND:

• the nature of products and services
• nature of production processes
• classes of customer
• distribution methods undies to provide the services
• if applicable, nature of regularity environment