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ACCA Strategic Professional · Strategic Business Reporting (International) · Other reporting issues

Falcon Group reports to its CODM on four operating segments. External revenue of the four reportable segments totals $270m, while group external revenue is $400m. Other operating segments below the thresholds make up $60m, and the rest is unallocated corporate and other items. Under IFRS 8, which conclusion is correct?

The 75% test fails because reportable segments cover only $270m, or 67.5%, of $400m external revenue against the required $300m. Further operating segments must be reported, even if below the 10% thresholds, until at least 75% of external revenue is covered.

  1. AThe 75% test is met as 270/400 is above 67%, so no further segments are needed
  2. BThe 75% test is not met, so additional operating segments must be reported until at least 75% of group external revenue is includedCorrect
  3. CThe 75% test is met only if inter-segment revenue is added
  4. DSegments must be reported until 100% of revenue is covered

Explanation

IFRS 8 requires reportable segments to account for at least 75% of external revenue. 75% of $400m is $300m, but reportable segments give only $270m (67.5%). Additional segments, even those below the 10% thresholds, must be identified as reportable until the 75% level is reached; $60m of other segments would take coverage to $330m.

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