Segment Reporting: Thresholds and Measurement for IFRS 8

Thresholds of Reportable Segments

An entity must report separately information about an operating segment that meets any of the following quantitative thresholds:

  • its reported revenue, including external sales and intersegment sales is 10% or more of the combined internal and external revenue of all operating segments
  • its reported profit or loss is 10% or more of the greater of
    • the combined profit of all segments that did not report a loss, and
    • the combined reporting loss of all segments that reported a loss
    • its assets are 10% or more of the combined assets of all operating segments

Keep in mind that when ‘any’ of these thresholds are met, segment information should be provided.

So long as one of them is met, segmented information should be provided.

Example of Reportable Segments Threshold

Let’s look at a quick example.

Say a company made a profit of €700,000 last year, broken down as follows:

  • Combined profit of the profit making segments was €1,000,000
  • Combined loss of the loss making segments was €300,000
  • Therefore, total profit €700,000

Therefore the threshold for segments reporting either a profit or a loss is €100,000 which is the greater of

  • €1,000,000 x 10% = €100,000, and
  • €300,000 x 10% = €30,000

So any segment with a profit or loss greater than €100,000 is a reportable segment.

In some cases an operating segment may not meet the quantitative threshold, segment information may still be provided about these if management believe the information about the segment would be useful to users.

NB: Reportable segments must make up at least 75% of the entity’s revenue.

Minimum and maximum number of reportable segments

An entity must report separately information about each operating segment.

So how many operating segments should an entity have?

IFRS 8 states operating segments should make up at least 75% of the entity’s total revenue.

So let’s say you have identified a few operating segments, but they only make up 68% of the entity’s total revenue, then you should keep adding operating segments until at least 75% of revenue is covered by reportable segments.

There’s no limit on the maximum number of reportable segments, but if there are too many, the information may become too detailed.

For this reason, a practical limit of ten reportable segments is recommended.

So once we have the reportable segments identified and disclosed, where do the others go?

The results of the remaining segments are combined and categorised under “Other segments” category.


Under IFRS 8, the amount of each segment item reported shall be the measure reported to the chief operating decision maker for the purposes of making decisions about allocating resources to the segment and assessing its performance.

So, however the entity reports results to the CEO or board of directors, is how the information should be presented in the financial statements.

Any adjustments and eliminations made in preparing the financial statements shall be included in determining the segment results only if they are included in the information provided to and used by the chief operating decision maker.

If amounts are allocated to reported segment profit or loss, assets or liabilities, they should be allocated on a reasonable basis.