Operating segments are separately reportable where they exceed 15% of revenue / profits / assets. These must in total cover 80% of total revenue. Is…

The statement is false because it provides incorrect quantitative thresholds for identifying reportable operating segments. According to the authoritative standard, IFRS 8 Operating Segments, the correct thresholds are 10% for the individual segment test and 75% for the overall revenue reconciliation test.

An operating segment is separately reportable if it meets any of the following 10% quantitative thresholds:

1. Its reported revenue (including both external sales and intersegment sales) is 10% or more of the combined revenue of all operating segments.

2. The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of (i) the combined reported profit of all profitable segments or (ii) the combined reported loss of all loss-making segments.

3. Its assets are 10% or more of the combined assets of all operating segments.

Furthermore, after identifying segments based on the 10% tests, the total external revenue of these reportable segments must be at least 75% of the entity's total consolidated revenue. If this 75% threshold is not met, additional segments must be identified as reportable until the threshold is reached.

This is a "True or False" question. The statement is false because it incorrectly states the thresholds as 15% and 80%, whereas the official standard, IFRS 8, specifies 10% and 75%, respectively.

1. International Accounting Standards Board (IASB). (2006). International Financial Reporting Standard 8: Operating Segments.

Paragraph 13: This section explicitly defines the 10% quantitative thresholds. It states

"An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds: (a) Its reported revenue... is 10 per cent or more... (b) The absolute amount of its reported profit or loss is 10 per cent or more... (c) Its assets are 10 per cent or more..."

Paragraph 15: This section establishes the 75% overall revenue test. It states

"If the total external revenue reported by operating segments constitutes less than 75 per cent of the entity’s revenue

additional operating segments shall be identified as reportable segments... until at least 75 per cent of the entity’s revenue is included in reportable segments."

2. Nobes

C.

& Parker

R. (2020). Comparative International Accounting (14th ed.). Pearson Education.

In the chapter discussing segment reporting

the text explains the application of IFRS 8: "An operating segment is significant

and therefore a reportable segment

if it meets one of three 10 per cent quantitative thresholds... In addition

the total external revenues of the reportable segments must be at least 75 per cent of the total consolidated revenues of the entity." (This is a standard representation found in reputable academic accounting textbooks that analyze IFRS standards).

3. University of Melbourne. (n.d.). ACCT90013 Financial Accounting: Lecture 8 - Segment Reporting.

Course materials for advanced financial accounting frequently detail these specific rules. Lecture notes typically summarize IFRS 8

stating: "Quantitative thresholds (para. 13): An operating segment is reportable if it meets any of the following: Revenue is 10% or more of combined segment revenue; Absolute profit/loss is 10% or more of the greater of combined profits or combined losses; Assets are 10% or more of combined segment assets... Overall size test (para. 15): External revenue of reportable segments must be at least 75% of total entity revenue."