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IAS 14: Segment Reporting

Introduction
IAS 14 Segment Reporting is applicable for periods beginning on or after 1 July 1998.

IAS 14 prescribes principles for reporting financial information by segment to help

users of financial statements:
• better understand the entity’s past performance;
• better assess the entity’s risks and returns; and
• make more informed judgements about the entity as a whole.

IAS 14 is applied by entities whose equity or debt securities are publicly traded and
by entities that are in the process of issuing equity or debt securities in public
securities markets. If another entity chooses to disclose segment information in
financial statements that comply with international financial reporting standards, it
must comply fully with the requirements of IAS 14.

Summary of IAS 14
An entity reports information for business segments and for geographical segments,
indicating the types of products and services included in each reported business
segment and the composition of each reported geographical segment.

One basis of segmentation is primary (either business or geographical); the other is

secondary. The source and nature of the entity’s risks and rates of return determine
whether the primary reporting format is business segments or geographical segments.
This is usually identified by the entity’s internal organisational and management
structure and its system of internal financial reporting to senior management.

A business or geographical segment is identified as reportable if a majority of its

revenue is earned from sales to external customers and:
• its revenue is 10 per cent or more of total revenue, external and internal, of all
segments; or
• its result (either profit or loss) is 10 per cent or more of the combined result of all
segments in profit or the combined result of all segments in loss, whichever is the
greater in absolute amount; or
• its assets are 10 per cent or more of the total assets of all segments.

Any other segment can be designated as a reportable segment. If total external

revenue attributable to reportable segments is less than 75 per cent of the total
consolidated revenue, additional segments are identified as reportable segments until
at least 75 per cent of total revenue is included in reportable segments.

The following is disclosed for each primary reportable segment:

• Revenue, separately disclosing sales to external customers and inter-segment
revenue. The basis of inter-segment pricing is also disclosed;
• Result (before interest and taxes) from continuing operations and separately the
result from discontinued operations;
• Carrying amount of segment assets;
• Segment liabilities;
• Cost incurred in the period to acquire property, plant and equipment, and
intangibles;
Web Summaries
IAS 14: Segment Reporting

• Depreciation and amortisation charges, and other significant non-cash expenses;

or cash flows from operating, investing and financing activities in accordance with
IAS 7 Cash Flow Statements;
• Aggregate share of the profit or loss of associates, joint ventures, or other
investments accounted for under the equity method.

The following is disclosed for each secondary reportable segment:

• Revenue, separately disclosing sales to external customers and inter-segment
revenue;
• Carrying amount of segment assets; and
• Cost incurred in the period to acquire property, plant and equipment, and
intangibles.

Segment information is prepared in conformity with accounting policies used in

preparing and presenting the consolidated financial statements, and is reconciled to
these financial statements. There is symmetry between the inclusion of items in
segment result and in segment assets.