Question

According to AASB 8, operating segments are determined by -

A) 10 per cent or more of the combined revenue, both external and internal, of all operating segments

B) 10 per cent or more of the combined assets of all operating segments

C) Either A) or B)

D) None of the above

Answer 1

According to Accounting Standard AASB 8, Operating Segment is a part of an entity that earn Revenues or make expenses by indulging in business activities.If an unit of the entity is self sustainable and has a major chunk of all business and can be lifted out of the whole company is known as Segment. To assess its performance and to allocate resources, the chief economic adviser regularly reviews its operating results. Financial and accounting information for operating segments is available distinctly.

An Entity need to report the financial results of its Reportable Operating Segments separately. An Segment is reportable if it satisfy any one the quantitative threshold. These are :

a) if the reported revenue of the operating segment is 10 percent or more than the revenue of the combined entity

b) if the reported profit or loss of the segment is 10 percent or more than the combined reporting profit of all the segments.

c) if assets are 10 per cent or more of the combined assets of all operating segments.

So, According to AASB 8, operating segments are determined by any one of the above. So, the answer is Either A) or B)