Segmental Information
Introduction
In general, IFRS 8 Operating Segments place a requirement on specific classes of entities (particularly those entities that have publicly traded securities) to disclose information concerning their respective operating segments, products and services, the geographical areas in which they compete as well as their major customers (IFRS 8 Operating Segments, 2014). The information that is provided by corporations pursuant to these requirements is based on internal management reports concerning the measurement of disclosed segment information as well as the identification of operating segments (IFRS 8 Operating Segments, 2014). Although its proponents argue that the IFRS 8 Operating Segments are adequate
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Where an entity’s debt or equity instruments are traded in a public market or
2. Where an entity files, or is in the process of filing, its (consolidated) financial statements with a securities commission or other regulatory organization for the purpose of issuing any class of instruments in a public market [IFRS 8.2] (IFRS 8 Operating Segments, 2014).
In those cases where consolidated as well as separate financial statements for the parent entity are consolidated into a single financial report, segment information is only required to be reported on the basis of the consolidated financial statements [IFRS 8.4] (IFRS 8 Operating Segments, 2014). The definition of an operating segment provided by IFRS 8 is being a component of an entity [IFRS 8.2]:
1. That engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity);
2. Whose operating results are reviewed regularly by the entity 's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and,
3. For which discrete financial information is available (IFRS 8 Operating Segments, 2014).
In addition, IFRS 8 Operating Segments contains a requirement for entities to report descriptive and financial information concerning its reportable segments which are defined as “operating segments or
Publicly traded companies are subject to the reporting and disclosure requirements of the Securities Exchange Commission (SEC). The laws that govern the securities industry were established to provide transparency to investors, creditors and shareholders alike. According to Hoyle, Schaefer & Doupnik, (2015) there are seven major disclosure requirements, the first being a five-year summary of operations to encompass sales, assets, income from continuing operations. Followed by a description of business activities, a three year summary of industry segments to include foreign and domestic operations, a list of company directors and executives, quarterly market price of common stock for the last two years, restrictions on the company’s ability to continue paying dividends, and finally, an analysis of the company’s financial condition, changes in the conditions and results of operation.
There are a number of different reporting requirements that are needed to comply with the SEC. These include the provision of financial statements on a quarterly basis (10-Q) along with an annual report (10-K). These statements must adhere to a specific format that governs how financial statements are prepared, and how the information is presented. There are many sections to these forms that must be included. Moreover, the information must be accurate, and prepared to guidelines laid out in the Generally Accepted
Operating Segments: Improving Disclosure From the Bottom Up. (2011, November). Retrieved January 30, 2013, from PWC: http://www.pwc.com/gx/en/audit-services/publications/corporate-reporting/investor-view/operating-segments-improving-disclosure-from-bottom-up.jhtml
2- The Financial statement disclosure is required when a company has two different segments, as is the case of the Sony Entertainment.
A minimum structure is required, either by nature or by function. Several items have to be disclosed separately on the face of the income statement or within the notes.
Furthermore, according to ASC 810-10-10-1, it explains the objectives of the consolidated financial statements, as
Additionally, the implementation guidance provided in IAS 1 BC56 states, “The Board recognizes that an entity may elect to disclose the results of operating activities, or a similar line item, even though this term is not defined. In such cases, the Board notes that the entity should ensure that the amount disclosed is representative of activities that would normally be regarded as ‘operating’. In the Board’s view, it would be misleading and would impair the comparability of financial statements if items of an operating
The requirements of the applicable financial reporting framework relevant to accounting estimates, including related disclosures
Entity-wide disclosures are required under Accounting Standards Codification (ASC) 280-10-50-40 through 280-10-50-42. The disclosures are required because every corporation does not report information in a similar fashion, and the disclosures would provide comparability of the financial statements among entities. For example, if a corporation uses a geographic approach in its financial statements, disclosing certain information about the products or services sold will make comparability to other companies much easier. The disclosures will also help with comparability within an entity if they decide to choose another method of reporting operating segments in the future. There are three types of entity-wide disclosures; products and services, geographic areas, and/or major customers. Every public company has to comply with the disclosures, even if the company has one reportable segment. The only exception to the entity-wide disclosures is if it is impractical to provide the information, such as it would be extremely costly to the corporation, or if the “internal reporting systems are not capable of gathering financial information by product or service by geographic area.” A disclosure should be made when entity-wide disclosures are impractical.
As the business environment grows and companies find new ways to expand into their respective - or even new – markets, it is important that reporting standards stay up to date with changes and continue to assist companies in providing their users with useful accounting information. Information is labelled as being useful when it meets the
States. Companies should report income, liability, equity, and assets. Many people (stockholders, investors, etc.) who have a stake in the company want to know this information before providing a service. In this paper, International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) will be compared for
This paper will analyze these views as they apply to the discloser of segment information for public entities as required by topic 280 of the FASB accounting standards codification, and discussed in Statement of Financial Standards No. 131 (“SFAS 131). The paper is structured as follows: Section II provides an overview of the objective and general purpose of financial reporting and the qualitative characteristics off useful financial information as determined by the Financial Accounting Standards Board (“FASB”), section III introduces the concept of segment reporting and outlines the requirements for disclosures of segment information for public companies, section IV evaluates the relevance of
IASB. 2010, "The Conceptual Framework for Financial Reporting" IFRS, pp. A21- A38, viewed 23 April 2014,
IAS 18 considers the accounting procedure of potential components of revenue organization primarily from transactions involving the sale of goods, rendering of services, as well as through other organizations or individuals property of the reporting organization, giving interest, dividends or royalties. If the probability of the economic
They have two operating sectors: automotive and financial services. Within these sectors, their business is divided into reportable segments based upon the organizational structure that they use to evaluate performance and make decisions on