SEGMENT REPORTING

Segment Reporting in Accounting

Segment Reporting in Accounting

Introduction

Segment Reporting is a tool that enables users of financial statements to identify and analyze risks and opportunities faced by diversified firms. Understanding these risks and these opportunities is the key to a good analysis of the performance and potential of a company. The amount and volatility of future cash flows are of great interest for all investors. However, these elements are directly influenced by the economic prospects of different industries and geographic markets in which the company is engaged. Segment information improves the decision making process of investors by allowing them to take it into account not only information about the company, but also data on industries and regional markets. This allows investors to measure the impact that changes in one sector could have on the company as a whole. Predicting the amount and volatility of cash flows is improved.

Segment reporting under IFRS

Objective

The objective of this Standard is to establish policies for segment reporting (information about the different types of products and services an enterprise produces and the different geographical areas in which it operates), in order to help users the financial statements:

Better understand the performance of the company in the past

Better assess the risks and returns of the company

Make more informed judgments about the enterprise as a whole

Scope

This Standard applies to the complete sets of published financial statements that comply with International Accounting Standards. This Standard should be applied by enterprises whose equity or debt or publicly traded companies that are in the process of issuing securities for trading in public securities markets. Voluntary disclosure of segment information is also advisable for companies that produce financial statements that comply with International Accounting Standards whose securities are not traded on organized markets. If a financial report contains both the consolidated statements of a company whose securities are publicly traded and the separate financial statements of the parent or one or more subsidiaries, it is only necessary to present segment information for the consolidated data. If any of the subsidiary is itself an enterprise whose securities are publicly traded, it will present segment information in its own separate financial report.

Overview

For fiscal years beginning on or before 31.12.2008, the IAS is shown below apply 14 Segment Reporting. IFRS 8 Operating Segments replaces with mandatory application for annual periods beginning on or after 31.12.2008, from IAS 14, IFRS 8 may also be on a voluntary basis already used earlier.

Segment Reporting by IAS 14

The segment reporting under IAS is regulated by the revised (revised), International Accounting Standard (IAS) 14 Segment Reporting. The scope of IAS 14 applies to any full annual accounts which are prepared in accordance with IAS. Mandatory disclosure is required to be publicly traded by the revised IAS 14 required segment information but only for companies whose shares.

Segmentation principles

IAS 14 requires the application of the same accounting principles (accounting policies), which can be found in the preparation and presentation of individual or consolidated financial application. The IASC is therefore considered that the management of the reporting organization for the (aggregated) financial statement already the most appropriate ...