Segment Reporting for IFRS 8

Segment reporting provides financial information about the individual units of the company. It’s intended to give information to users of the financial statements regarding the financial performance and position of the most important operating units of a company.

What you’ll need to know for IFRS 8

  • You’ll need to determine the nature and extent of reportable segments
  • You’ll also have to specify and discuss the nature of segment information to be disclosed

IFRS 8 Segment Reporting is the accounting standard applicable to operating segments.

Scope of IFRS 8

  • IFRS 8 applies to the annual and interim financial statements of an entity
  • It applies to the separate or individual financial statements of an entity and to the consolidated financial statements of a group with a parent
  • Whose debt or equity instruments are traded in a public market, or
  • That files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market.

Core Principle

  • Enables users to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

Reportable Segments

  • An entity shall report separately information about each identified operating segment and aggregated operating segments that exceed the quantitative thresholds.

Quantitative Thresholds

  • An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds:
    – Its reported revenue, including both sales to external customers and inter-segment 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 amount, of (i)The combined reported profit of all operating segments that did not report a loss, and
    (ii) The combined reported loss of all operating segments that reported a loss
    – Its assets are 10 per cent or more of the combined assets of all operating segments.
  • If the total external revenue reported by operating segments constitutes less than 75% of the total revenue, additional operating segments shall be identified as reportable segments until at least 75% of the entity’s revenue is included in reportable segments.

Operating Segments

A component of an entity:

  • That engages in business activities from which it may earn revenues and incur expenses
  • Whose operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance; and
  • For which discrete financial information is available.

Chief Operating Decision Maker (CODM):

The individual or group of individuals responsible for strategic decision making regarding the entity. I.e., allocates resources and assesses performance


Two or more operating segments may be aggregated if the segments are similar in each of the following respects:

  • Products and services
  • Production processes
  • Customers
  • Distribution
  • Regulatory environment.


A reportable segment is required to disclose:

  • factors used to identify reportable segments
  • any aggregation of segments
  • segment P&L
  • segment assets

If the following is reported regularly to the CODM it will form an additional disclosure:

  • Segment liabilities
  • The following income and expense:
    – internal and external revenue
    – interest income and expense
    – depreciation, amortisation and other non-cash items
    – other material income and expense
    – income tax
    – interest in the P&L of associates or joint ventures under the equity method

IFRS 8 also requires entities to provide a number of reconciliations and to make certain entity-wide disclosures. However, the disclosures not required if information has already been provided as part of the information on reportable segments.