IFRS 8

Who does IFRS 8 apply to?


The IASB did not intend to change the range of entities required to present segment information, but we believe IFRS 8 has a wider scope than IAS 14. It applies to entities whose equity or debt securities are publicly traded or that issue, or are in the process of issuing, any class of instrument in a public market.

What is an operating segment?


An “operating segment” is a component of a public entity that engages in business activities for which discretefinancial information is both available and regularly reviewed by the chief operating decision-maker (CODM) for the. purpose of making operating decisions about the allocation of resources.

What is the 75% test when reporting for segment information?

75% “Reporting Sufficiency” Test: if the total (consolidated) revenue reported by operating segments constitutes less than 75% of external (consolidated) revenue, additional segments need to be identified as reportable, even if they don’t meet the 10% tests, until at least 75% of external revenue is included in reportable segments.

-The practical limit to the number of segments is 10, which is not a precise limit.

What is the approach prescribed by IFRS 8 in identifying an operating segment?

In general, IFRS 8 has a management approach to the identification of operating segments and its aim is to enable the users to see an entity through the eyes of management. It is sometimes the case that CODM regularly reviews information on different product lines and geographical regions at the same time.

What is the purpose of IFRS 8?


IFRS 8 requires an entity whose debt or equity securities are publicly traded to disclose information to enable users of its financial statements to evaluate the nature and financial effects of the different business activities in which it engages and the different economic environments in which it operates.

What is the scope of IFRS 8?

IFRS 8 applies to the financial statements of any entity whose debt or equity instruments are traded in a public market or who is seeking to issue any class of instruments in a public market.