IFRS 8 states that an entity shall disclose information so that users of the financial statements can evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.
The information to disclose is:
- Profit or loss
Profit or Loss:
- a measure of profit or loss for each reportable segment
- for each reportable segment
- revenues from external customers
- revenues from transactions with other operating segments of the same entity
- interest revenue
- interest expense
- depreciation and amortisation
- material items of income and expense in accordance with IAS 1
- the entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method
- income tax expense or income
- material non-cash items other than depreciation and amortisation.
- a measure of total assets liabilities for each reportable segment if such an amount is reported regularly to the chief operating decision maker
- the amount of investment in associates and joint ventures accounted for by the equity method and
- the amounts of additions to non-current assets (except financial instruments, deferred tax assets, post-employment benefits assets and rights arising under insurance contracts) which fall under segment assets
The factors used to identify reportable segments, and the basis of the company’s organization (whether by products, services or regions) and the types of products or services provided by the reportable segments must be disclosed.
6 minimum disclosures
At a minimum the entity must disclose:
- The basis of accounting for any transactions between reportable segments
- The nature of any differences between the measurement of the reportable segments’ profit or loss before tax and the entity’s profit or loss, (e.g. allocation of centrally incurred costs or accounting policies)
- The nature of any differences between the measurement of the reportable segments’ assets and the assets of the entity.
- The nature of any differences between the measurement of the reportable segments’ liabilities and the liabilities of the entity.
- The nature of any changes from prior periods in measurement methods used to determine segment profit or loss and the effect if any, on profit or loss from those changes.
- The nature of asymmetrical allocations to reportable segments. (e.g. a reportable segment may be charged the depreciation expense for an asset without allocating the depreciable asset to that segment).
Some reconciliations are required to allow users of the financial statements to understand how segment information relates to the information provided elsewhere in the financial statements.
So IFRS 8 requires the following reconciliations:
- the totals of the segment revenues to the entity’s revenue
- the totals of reported segment profits or losses to the entity’s profit
- the total of the reportable segments’ assets to the entity’s assets
- the total of the liabilities of the reportable segments to the entity’s liabilities (only if segment liabilities are reported)
- the total of the reportable segments amounts for every other material item of information disclosed to the corresponding amount for the entity. (So, if there’s any big material items in the financial statements, reconcile them to the entity’s amount)