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

Under IFRS 8, Kestrel Co reports segments that together account for 68% of total external revenue after applying the 10% thresholds. Which action is required?

Kestrel must identify additional operating segments as reportable, even though they are below the 10% thresholds, until reportable segments represent at least 75% of total external revenue. Remaining items go into an all other segments category.

  1. ANo action, because the 10% tests alone determine reportable segments
  2. BReport additional operating segments, even if below the 10% thresholds, until at least 75% of external revenue is includedCorrect
  3. CAggregate all remaining segments into one segment so total reaches 100%
  4. DReduce the reported segments to those above 75% of profit

Explanation

IFRS 8 requires that reportable segments' external revenue be at least 75% of entity revenue. If the thresholds give less, additional segments must be identified as reportable until 75% is reached. Remaining segments are shown in an 'all other segments' category, not aggregated to 100%.

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