International Financial Reporting Standards_guide.pdf

Chapter 35 Operating Segments (IFRS 8) 395
■ An entity should provide information about the extent of its reliance on its major customers.
If the revenues from transactions with a single customer exceed 10 percent of
an entity’s revenue, the entity should disclose the fact and the amount of revenues
from each such a customer, and the identity of the segment(s) reporting the revenues.
35.5.8 As a result of issuing IFRS 8, certain consequential amendments were also made to
IAS 34 (refer to chapter 36). Additional information relating to segment reporting should also
be presented in an entity’s interim financial reporting.
35.6 COMMENTARY
35.6.1 The core principle of IFRS 8 is that an entity should disclose information to enable
users of its financial statements to evaluate:
■ the nature and financial effects of the business activities in which it is engaged; and
■ the economic environments in which it engages, viewed in the same way that management
views it (that is, the management approach).
35.6.2 This approach to reporting segment information will benefit both the preparers and
users of financial statements. It should reduce the cost of providing disaggregated information
for many entities because it uses segment information generated for management’s use.
The majority of disclosures required by IFRS 8 are only required if they are included in the
information that is regularly reviewed by the chief operating decision maker.
35.6.3 IFRS 8 requires that a measure of segment profit or loss and segment assets be disclosed
regardless of whether those measures are reviewed by the chief operating decision
maker. This requirement was subsequently amended through the IASB’s Annual Improvements
Project to clarify that the measure of segment assets will be nil when such information is not
provided to the chief operating decision maker. In other words, if the chief operating decision
maker does not review information, for example segment assets, that number is not required
to be disclosed in the segment report.
35.6.4 In the instance that an entity only has one reportable segment, the entity-wide disclosures
will still be required.
35.6.5 IFRS 8 was released by the IASB in November 2006 and replaced IAS 14, Operating
Segments. The IASB issued IFRS 8 as part of their project to converge IFRSs with U.S. GAAP.
The IASB’s current project agenda does not include any future amendments to segment
reporting.
35.6.6 The effective date of IFRS 8 was on or after January 1, 2009. At this early stage of
application of the standard, complications and inconsistency are difficult to identify.