Comparison between U.S. GAAP and International ... - Grant Thornton

Comparison between U.S. GAAP and International Financial Reporting Standards 151
IFRS
operations may be operating segments before earning
revenues (IFRS 8.5).
The term chief operating decision maker identifies a
function, not necessarily a manager with a specific title.
The function is to allocate resources to and asses the
performance of the operating segments of an entity
(IFRS 8.7).
Matrix form of organisation: an entity with business
components that are managed in more than one way and
the Chief Operating Decision Maker reviews all of the
information provided (IFRS 8.10). With respect to a matrix
form of organization, the IASB decided that the use of
components based on products and services was
inconsistent with the management approach. Accordingly,
IFRS 8 requires the identification of operating segments to
be made by reference to the core principle of IFRS 8
(IFRS 8.10 and BC27).
U.S. GAAP
Similar to IFRS (ASC 280-10-50-5).
The characteristics above may apply to two or more
overlapping sets of components for which managers
are held responsible. That structure is sometimes
referred to as a matrix form of organization. For
example, in some enterprises, certain managers are
responsible for different product and service lines
worldwide, while other managers are responsible for
specific geographic areas. The chief operating decision
maker regularly reviews the operating results of both
sets of components, and financial information is
available for both. Unlike IFRS 8, in that situation, the
components based on products and services would
constitute the operating segments (ASC 280-10-50-9).
Reportable segments
Aggregation criteria
Two or more operating segments may be aggregated into
a single operating segment if aggregation is consistent
with the core principle of IFRS 8, the segments have
similar economic characteristics, and the segments are
similar in each of the following respects (IFRS 8.12):
• The nature of the products and services
• The nature of the production processes
• The type or class of customer for their products and
services
• The methods used to distribute their products or
provide their services
• If applicable, the nature of the regulatory
environment, for example, banking, insurance or
public utilities
Quantitative thresholds
An entity shall report separately information about an
operating segment that meets any of the following
quantitative thresholds (IFRS 8.13):
• Its reported revenue, including both sales to external
customers and intersegment sales or transfers, is 10
per cent or more of the combined revenue, internal
and external, of all operating segments
• The absolute amount of its reported profit or loss is
10 per cent or more of the greater, in absolute
Aggregation criteria
Similar to IFRS (ASC 280-10-50-11).
Quantitative thresholds
Similar to IFRS (ASC 280-10-50-12 through 50-19).
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