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Detailed Information On Withdrawal of IAS 14 IFRS 8

Withdrawal of IAS 14 IFRS 8

Detailed Information On Withdrawal of IAS 14 IFRS 8: The disclosures may be, but need not be, shown on the face of the financial statements. Only the gain or loss on actual disposal of assets and settlement of liabilities must be on the face of the income statement. [IAS 35.39] IAS 35 does not prescribe a particular format for the disclosures. Among the acceptable ways:

  • Separate columns in the financial statements for continuing and discontinuing operations
  • One column but separate sections (with subtotals) for continuing and discontinuing operations within that single column
  • One or more separate line items for discontinuing operations on the face of the financial statements with detailed disclosures about discontinuing operations in the notes (but the line-item disclosure requirements of IAS 1 Presentation of Financial Statements must still be met).

In periods after the discontinuance is first approved and announced, and before it is completed, the financial statements must update the prior disclosures, including a description of any significant changes in the amount or timing of cash flows relating to the assets and liabilities to be disposed of or settled and the causes of those changes.

The disclosures continue until completion of the disposal, though there may be cash payments still to come.

Comparative information presented in financial statements prepared after initial disclosure must be restated to segregate the continuing and discontinuing assets, liabilities, income, expenses, and cash flows. This helps in trend analysis and forecasting.

IAS 35 applies to only to those corporate restructurings that meet the definition of a discontinuing operation. But many so-called restructurings are of a smaller scope than an IAS 35 discontinuing operation, such as plant closings, product discontinuances, and sales of subsidiaries while the company remains in the same line of business. IAS 37 on provisions specifies the accounting and disclosures for restructurings.

Detailed Information On Withdrawal of IAS 14 IFRS 8

IFRS 8 Operating Segments requires particular classes of entities (essentially those with publicly traded securities) to disclose information about their operating segments, products and services, the geographical areas in which they operate, and their major customers. Information is based on internal management reports, both in the identification of operating segments and measurement of disclosed segment information.

IFRS 8 was issued in November 2006 and applies to annual periods beginning on or after 1 January 2009.

Detailed Information On Withdrawal of IAS 14 IFRS 8

Scope

IFRS 8 applies to the separate or individual financial statements of an entity (and to the consolidated financial statements of a group with a parent):

  • whose debt or equity instruments are traded in a public market or
  • that files, or is in the process of filing, its (consolidated) financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market [IFRS 8.2]

However, when both separate and consolidated financial statements for the parent are presented in a single financial report, segment information need be presented only on the basis of the consolidated financial statements [IFRS 8.4]

Operating segments

IFRS 8 defines an operating segment as follows. An operating segment is a component of an entity: [IFRS 8.2]

  • that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity)
  • whose operating results are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and
  • for which discrete financial information is available

Reportable segments

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria: [IFRS 8.13]

  • its reported revenue, from both external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments, or
  • the absolute measure of its reported profit or loss is 10 per cent or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss, or
  • its assets are 10 per cent or more of the combined assets of all operating segments.

Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principles of the the standard, the segments have similar economic characteristics and are similar in various prescribed respects. [IFRS 8.12]

If the total external revenue reported by operating segments constitutes less than 75 per cent of the entity’s revenue, additional operating segments must be identified as reportable segments (even if they do not meet the quantitative thresholds set out above) until at least 75 per cent of the entity’s revenue is included in reportable segments.

Detailed Information On Withdrawal of IAS 14 IFRS 8

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