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Mfrs 8 Operating Segments
Mfrs 8 Operating Segments
OPERATING SEGMENT
Introduction
• Issued by MASB in July 2009
• The standard is applicable to entities:
a. whose equity or debt securities are publicly traded; OR
b. in the process issuing securities to the public; OR
c. who voluntarily providing segmental information
• This standard is to be applied in complete sets of
published financial statements that comply with
Financial Reporting Standards.
• An entity that presents its own and consolidated
financial statements has to present information on its
reportable segments only on the basis of the
consolidated financial statements.
• Sets out guidelines on how an entity should report
information about its operating segments in the
annual financial statements and interim financial
reports.
• Sets out the disclosure requirements about the
related products and services, geographical areas
and major customers
• Information about the different business activities
and economic environment is important to assist
users of FS to:
1.Better understand the entity’s past performance;
2.Better assess the entity’s risks and returns; and
3.Make more informed judgement about the entity as
a whole
Operating Segments (MFRS 8 – para 5)
- head office
- research and development department
75% Test
Revenue:
• Segment revenue
• Segment profit or loss before tax and discontinued
operations, or profit after tax if income tax is allocated to the
various segments.
• Segment assets
• Segment liabilities (if reported)
• Other material amounts
Revenue
RM
Total revenue for reportable segments 15,700
Other revenues 500
Elimination of inter-segment revenues (700)
Entity’s revenues 15,500
Assets
RM
Total assets for reportable segments 26,000
Investment in associates 4,500
Other Assets 1,000
Elimination of receivable from headquarters (500)
Other unallocated amounts 400
Entity’s assets 31,400
Liabilities
RM
Total liabilities for reportable segments 8,000
Unallocated retirement benefits liabilities 500
Entity’s liabilities 8,500
Profit or loss
RM
Total profit or loss for reportable segments 3,250
Share of profit of associates 800
Other profit or loss 50
Elimination of inter-segment profits (100)
Unallocated amounts:
litigation settlement received 40
Other corporate expenses
Entity’s profit or loss before taxation 3,890
Other material items
Reportable Adjustments Entity totals
segments (RM)
Interest revenues 3,750 (40) 3,710
Interest expenses 2,750 30 2,780
Expenditure for assets 2,350 300 2,680
Depreciation and amortization 2,450 - 2,450
Impairment of assets 300 - 300
The reconciling item to adjust expenditure for assets is the amount incurred for
the corporate headquarter building which is not included in the segment
information. None of the other adjustment are material
Restatement of information for prior
periods
• If entity changes the structure of its internal organization
and the change affects the composition of its reportable
segment to change:
• Restate comparative statement of prior periods, and
disclose whether all corresponding items have been
restated
• If chose not to restate: prepare segmental reports in old
and new segmentation basis.
• Entity is allowed not to restate if information for
restatement not available/too costly to obtain/develop
• Disclose reason for not restating prior period
information