3/19/2017 IAS14SegmentReporting(Superseded)

IAS14SegmentReporting(Superseded)

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Overview
IAS14SegmentReportingrequiresreportingoffinancialinformationbybusinessorgeo g raphicalarea.Itrequiresdisclosuresfor'primary'and'secondary'segmentreporting
formats,withtheprimaryformatbasedonwhethertheentity'srisksandreturnsareaffectedpred omin antlybytheproductsandservicesitproducesorbythefactthatit
operatesindifferentgeo g raphicalareas.

IAS14wasissuedinAugust1997,wasapp lica b letoannualperiodsbeginningonorafter1July1998,andwassup ersededbyIFRS8OperatingSegmentswitheffectfrom

annualperiodsbeginningonorafter1January2009.

HistoryofIAS14
March1980 ExposureDraftE15ReportingFinancialInformationbySegment
August1981 IAS14ReportingFinancialInformationbySegment
1January1983 EffectivedateofIAS14(1981)
1994 IAS14(1981)wasreformatted
December1995 ExposureDraftE51ReportingFinancialInformationbySegment
August1997 IAS14SegmentReporting
1July1998 EffectivedateofIAS14(1997)
30November2006IAS14issupers ededbyIFRS8OperatingSegmentseffectiveforannualperiodsbeginning1January2009
RelatedInterpretations
None

SummaryofIAS14
ObjectiveofIAS14

TheobjectiveofIAS14(Revised1997)istoestablishprincip lesforreportingfinancialinformationbylineofbusinessandbygeo g raphicalarea.Itappliestoentitieswhose

equityordebtsecuritiesarepubliclytradedandtoentitiesintheprocessofissuingsecuritiestothepublic.Inaddition,anyentityvolu ntarilyprovidingsegmentinformation
shouldcomplywiththereq uirementsoftheStandard.
Applica bility

IAS14mustbeappliedbyentitieswhosedebtorequitysecuritiesarepubliclytradedandthoseintheprocessofissuingsuchsecuritiesinpublicsecuritiesmarkets.[IAS
14.3]

IfanentitythatisnotpubliclytradedchoosestoreportsegmentinformationandclaimsthatitsfinancialstatementsconformtoIFRSs,thenitmustfollowIAS14infull.[IAS
14.5]

Segmentinformationneednotbepresentedintheseparatefinancialstatementsofa(a)parent,(b)subsidiary,(c)equitymethodassociate,or(d)equitymethodjoint
venturethatarepresentedinthesamereportastheconsolid atedstatements.[IAS14.67]

Keydefinitions

Businesssegment:acomponentofanentitythat(a)providesasingleproductorserviceoragroupofrelatedproductsandservicesand(b)thatissubjecttorisksand
returnsthataredifferentfromthoseofotherbusinesssegments.[IAS14.9]

Geographic alsegment:acomponentofanentitythat(a)providesproductsandserviceswithinaparticu lareconomicenvironmentand(b)thatissubjecttorisksandreturns

thataredifferentfromthoseofcomp on entsoperatinginothereconomicenvironments.[IAS14.9]

Reportablesegment:abusinesssegmentorgeo g raphicalsegmentforwhichIAS14requiressegmentinformationtobereported.[IAS14.9]

Segmentrevenue:revenue,includingintersegmentrevenue,thatisdirectlyattribu ta bleorreasona blyallocabletoasegment.Includesinterestanddividendincomeand

relatedsecuritiesgainsonlyifthesegmentisafinancialsegment(bank,insurancecompany,etc.).[IAS14.16]

Segmentexpenses:expenses,includingexpensesrelatingtointersegmenttransa ctions,that(a)resultfromoperatingactivitiesand(b)aredirectlyattribu ta bleorreason

ablyallocabletoasegment.Includesinterestexpenseandrelatedsecuritieslossesonlyifthesegmentisafinancialsegment(bank,insurancecompany,etc.).Segment
expensesdonotinclude:
interest
lossesonsalesofinvestmentsordebtexting uishments
lossesoninvestmentsaccountedforbytheequitymethod
incometaxes
generalcorporateadministrativeandheadofficeexpensesthatrelatetotheentityasawhole[IAS14.16]

Segmentresult:segmentrevenueminussegmentexpenses,beforedeductingminorityinterest.[IAS14.16]

Segmentassetsandsegmentlia bilities:thoseoperatingassets(lia b ilities)thataredirectlyattribu ta bleorreasona blyallocabletoasegment.[IAS14.16]

Identifyingbusinessandgeographic alsegments

Anentitymustlooktoitsorg anisationalstructureandinternalreportingsystemtoidentifyrep ortablesegments.Inparticu lar,IAS14presumesthatsegmentationininternal

financialreportspreparedfortheboardofdirectorsandchiefexecutiveofficershouldnormallydeterminesegmentsforexternalfinancialreportingpurposes.Onlyifinternal
segmentsarenotalongeitherproduct/serviceorgeo g raphicallinesisfurtherdisa gg reg ationapp rop ria te.[IAS14.26]

Geo g raphicalsegmentsmaybebasedeitheronwheretheentity'sassetsarelocatedoronwhereitscustomersarelocated.[IAS14.14]Whicheverbasisisused,several
itemsofdatamustbepresentedontheotherbasisifsign ificantlydifferent.[IAS14.7172]
Primaryandsecondarysegments

Formostentitiesonebasisofsegmentationisprimaryandtheotherissecondary,withconside ra blylessdisclosurerequiredforsecondarysegments.Theentityshould
determinewhetherbusinessorgeo g raphicalsegmentsaretobeusedforitsprimarysegmentreportingformatbasedonwhethertheentity'srisksandreturnsareaffected

https://www.iasplus.com/en/standards/ias/ias14 1/3
3/19/2017 IAS14SegmentReporting(Superseded)
pred omin antlybytheproductsandservicesitproducesorbythefactthatitoperatesindifferentgeo g raphicalareas.Thebasisforidentificationofthepred omin antsource
andnatureofrisksanddifferingratesofreturnfacingtheentitywillusuallybetheentity'sinternalorg anisationalandmana gementstructureanditssystemofinternal
financialreportingtoseniormana gement.[IAS14.2627]

Whichsegmentsarereportable?

Theentity'srep ortablesegmentsareitsbusinessandgeo g raphicalsegmentsforwhichamajorityoftheirrevenueisearnedfromsalestoexternalcustomersandforwhich:

[IAS14.35]
revenuefromsalestoexternalcustomersandfromtransa ctionswithothersegmentsis10%ormoreofthetotalrevenue,externalandinternal,ofallsegmentsor
segmentresult,whetherprofitorloss,is10%ormorethecombinedresultofallsegmentsinprofitorthecombinedresultofallsegmentsinloss,whicheverisgreater
inabsoluteamountor
assetsare10%ormoreofthetotalassetsofallsegments.

Segmentsdeemedtoosmallforseparatereportingmaybecombinedwitheachother,ifrelated,buttheymaynotbecombinedwithothersign ificantsegmentsforwhichin
formationisreportedintern ally.Altern atively,theymaybesepa ratelyreported.Ifneithercombinednorsepa ratelyreported,theymustbeincludedasanuna llocatedreco ncil
ingitem.[IAS14.36]

Iftotalexternalrevenueattribu ta bletorep ortablesegmentsidentifiedusingthe10%thresho ldsoutlinedaboveislessthan75%ofthetotalconsolid atedorentityrevenue,

add itionalsegmentsshouldbeidentifiedasrep ortablesegmentsuntilatleast75%oftotalconsolid atedorentityrevenueisincludedinrep ortablesegments.[IAS14.37]

Verticallyinteg ratedsegments(thosethatearnamajorityoftheirrevenuefromintersegmenttransa ctions)maybe,butneednotbe,rep ortablesegments.[IAS14.39]Ifnot

sepa ratelyreported,thesellingsegmentiscombinedwiththebuyingsegment.[IAS14.41]

IAS14.4243containspecialrulesforidentifyingrep ortablesegmentsintheyearsinwhichasegmentreachesorloses10%sign ificance.

Whataccountingpoliciesshouldasegmentfollow?

Segmentaccountingpoliciesmustbethesameasthoseusedintheconsolid atedfinancialstatements.[IAS14.44]

Ifassetsusedjointlybytwoormoresegmentsareallocatedtosegments,therelatedrevenueandexpensesmustalsobeallocated.[IAS14.47]
Whatmustbedisclosed?

IAS14hasdetailedguidanceastowhichitemsofrevenueandexpenseareincludedinsegmentrevenueandsegmentexpense.Allcompanieswillreportastand ardised
measureofsegmentresultbasicallyoperatingprofitbeforeinterest,taxes,andheadofficeexpenses.Foranentity'sprimarysegments,revisedIAS14requiresdisclosure
of:[IAS14.5167]
salesrevenue(disting uishingbetweenexternalandintersegment)
result
assets
thebasisofintersegmentpricing
lia b ilities
capitaladditions
dep recia tionandamortisation
sign ificantunusualitems
noncashexpensesotherthandep recia tion
equitymethodincome

Segmentrevenueincludes"sales"fromonesegmenttoanother.UnderIAS14,theseintersegmenttransfersmustbemeasuredonthebasisthattheentityactuallyusedto
pricethetransfers.[IAS14.75]

Forsecondarysegments,disclose:[IAS14.6972]
revenue
assets
capitaladditions

OtherdisclosuremattersaddressedinIAS14:
Disclosureisrequiredofexternalrevenueforasegmentthatisnotdeemedarep ortablesegmentbecauseamajorityofitssalesareintersegmentsalesbut
nonethelessitsexternalsalesare10%ormoreofconsolid atedrevenue.[IAS14.74]
Specialdisclosuresarerequiredforchangesinsegmentaccountingpolicies.[IAS14.76]
Wheretherehasbeenachangeintheidentificationofsegments,prioryearinformationshouldberestated.Ifthisisnotpracticab le,segmentdatashouldbe
reportedforboththeoldandnewbasesofsegmentationintheyearofchange.[IAS14.76]
Disclosureisrequiredofthetypesofproductsandservicesincludedineachreportedbusinesssegmentandofthecomp ositionofeachreportedgeo g raphical
segment,bothprimaryandsecondary.[IAS14.81]

Anentitymustpresentareco ncilia tionbetweeninformationreportedforsegmentsandconsolid atedinformation.Ataminimum:[IAS14.67]

segmentrevenueshouldbereco nciledtoconsolid atedrevenue
segmentresultshouldbereco nciledtoacomp arab lemeasureofconsolid atedoperatingprofitorlossandconsolid atednetprofitorloss
segmentassetsshouldbereco nciledtoentityassets
segmentlia b ilitiesshouldbereco nciledtoentitylia b ilities.
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