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ACCA Strategic Professional · Strategic Business Reporting (International) · Presentation and disclosure in financial statements

Orla plc reports segment profit to its CODM after deducting head-office pension costs of $2m allocated to Segment X, but the consolidated financial statements recognise a different pension cost of $3m under IAS 19 for the same plan, as the internal report uses cash contributions of $2m. Which statement about IFRS 8 disclosure is correct?

The segment profit is reported using the $2m measure the CODM actually uses, not restated to IAS 19. The entity must explain the measurement basis and reconcile total segment profit to consolidated profit, showing the $1m difference as a reconciling item.

  1. ASegment profit must be restated to the IAS 19 cost of $3m, since IFRS 8 requires IFRS measurement
  2. BThe $2m internal measure is reported, with reconciliations of total segment profit to entity profit and an explanation of the measurement basisCorrect
  3. CThe segment profit is omitted because it differs from IFRS
  4. DBoth measures must be shown as separate segments

Explanation

IFRS 8 requires segment amounts to be reported on the basis used by the CODM, even if not IFRS-compliant. The entity must explain the measurement bases and reconcile total segment profit to entity profit before tax, showing the $1m difference as a reconciling item. Restating to IAS 19 is not required.

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