اذهب إلى المحتوى

Segmental Reporting from financial standards prespective- التقارير القطاعية من منظور المعايير المحاسبية


Recommended Posts

Ineed

إذا تكرمتم أريد شرح للعبارة Segmental Information معناها كيفية إستعمالها حسب المعايير الدولية :?:

 

 

محمد بشارة - أبوعبدالله

أستغفر الله العظيم واتوب اليه

رابط هذا التعليق
شارك

لم أكن أعرف هذا المصطلح من قبل و لكن من خلال بحثي وجدت أحد الروابط لأحد تقارير المصانع يوضح ما هو تحليل المعلوماتي لخطوط الأنتاج و يبدو لي كأنه نوع تحليل القوائم المالية طبقاً للمنتجات مثلاً

http://www.indianrayon.com/investors/financials/segmental_info.htm

الرابط موجود أعلاه لتوضيح مثال على ذلك و أنا في حقيقة الأمر معجب بهذا النوع من التحليلات و لكنه صعب جداً و لا يمكن تطبيقه من وجهة نظري بدون البرامج المحاسبية

" قُلِ اللَّهُمَّ مَالِكَ الْمُلْكِ تُؤْتِي الْمُلْكَ مَنْ تَشَاءُ وَتَنْزِعُ الْمُلْكَ مِمَّنْ تَشَاءُ وَتُعِزُّ مَنْ تَشَاءُ وَتُذِلُّ مَنْ تَشَاءُ بِيَدِكَ الْخَيْرُ إِنَّكَ عَلَى كُلِّ شَيْءٍ قَدِيرٌ"

مدير الموقع

رابط هذا التعليق
شارك

http://www.iasplus.com/standard/ias14.htm

هذا الرابط به شرح وافي باللغة الأنجليزية عن Segmental Information وددت لو ان أحدهم لديه المعلومات الكافيه لشرح هذا الموضوع حتى يستفيد الأخرون منه وسوف اقوم انا شخصيا بتقديم شرح عن هذا الموضوع بعد دراسته كامله حيث ان معلوماتي لا زالت بسيطة بهذا الموضوع

 

 

محمد بشارة - أبوعبدالله

أستغفر الله العظيم واتوب اليه

رابط هذا التعليق
شارك

أخونا العزيز / محمد بشارة

لقد بحثت في موسوعة المعايير المحاسبية الأمريكية الخاصة بي ووجدت التالي عن هذا الموضوع لعله يساعدك

المعيار المحاسبي الصادر من FASB و رقمه 14 و هو غير عامل به الأن و عنوانه هو Financial Reporting for Segments of a Business Enterprise و هو صلب الموضوع الخاص بك تم تعديله بالمعيار رقم 18 ثم تم تعديل أخر بالمعيار رقم 21 ثم تم تعديل أخر بالمعيار رقم 24 ثم تم الألغاء النهائي بعد ذلك

تم أدراج الشروط التي توضح كيفية الأفصاح عن القطاعات ( SEGMENTS ) التي سوف يتم بناء التحليل على أساسها في العديد من المعايير بعد ذلك و لكن المعيار المستخدم حالياً هو المعيار رقم 131 بعنوان Disclosures about Segments of an Enterprise and Related Information أو الأفصاح عن القطاعات الخاصة بالشركة و المعلومات المتعلقة بها و هذا المعيار صادر سنة 1997

أتمنى أن تكون هذه المعلومات مفيدة لك

يمكنك تنزيل المعايير من الموقع التالي

http://www.fasb.org/st/index.shtml

و بهذه المناسبة نريد أحد الأبحاث حول هذا الموضوع لكي ندرجه تحت بند دراسات المعايير المحاسبية في الموقع الثابت لنا بإذن الله و سوف تكون هنا المناقشات

و أتمنى لك التوفيق

" قُلِ اللَّهُمَّ مَالِكَ الْمُلْكِ تُؤْتِي الْمُلْكَ مَنْ تَشَاءُ وَتَنْزِعُ الْمُلْكَ مِمَّنْ تَشَاءُ وَتُعِزُّ مَنْ تَشَاءُ وَتُذِلُّ مَنْ تَشَاءُ بِيَدِكَ الْخَيْرُ إِنَّكَ عَلَى كُلِّ شَيْءٍ قَدِيرٌ"

مدير الموقع

رابط هذا التعليق
شارك

[align=left:193022a5de]Segment Reporting

Perspective and Issues

Segment reporting is the disclosure of information about an entity's operations in different industries, its foreign operations and export sales, and its major customers. The requirement for such disclosure is a relatively recent development in the history of financial reporting. It was necessitated by the continued growth of complex entities operating in various disparate industries or geographical markets, making entity-level financial statements less useful for purposes of predicting future earnings and cash flows unless further detailed information is provided.

Proposals to require segment financial information were met with opposition from preparers which objected to the additional effort required of them, and particularly to the feared disclosure of sensitive competitive data. These concerns paled, however, in comparison to the important needs of users of financial information. It became clear that, without the ability to understand which of an entity's major operations were making the most positive contributions to its results, users would be hindered in their ability to make intelligent investment decisions. Ultimately, this need was seen as being more important than the perceived competitive risks to the reporting entity.

The US Securities and Exchange Commission began requiring line-of-business information in registrants' annual filings in 1970, but in many instances this data was not included in the annual reports issued to stockholders. By 1974, the SEC required registrants to include some of this line-of-business information in their reports to stockholders. Finally, SFAS 14 was issued (in 1976), which established specific requirements under US GAAP for the disclosure of segment information in financial reports issued to stockholders. These requirements were later deleted for interim reports and for non-publicly-held companies. Under this standard, there was a rather wide range of acceptable definitions of industry segments.

The first international standard, IAS 14, issued in 1981, was closely modeled on the US standard, and thus the range of acceptable definitions of industry segments was also fairly wide. Subsequently, the IASC significantly revised this standard, effective in mid-1998, by changing the method of determining reportable segments to conform more closely to how the reporting entity is internally managed. Later, standard setters in the US and elsewhere essentially conformed their standards to this new reporting philosophy pioneered by IAS, as well.

Under the current approach, the burden of preparing segment disclosures is lessened if the segment data captured by the entity's managerial reporting system corresponds with the standard's definitions of industry and/or geographical segments. In other cases, it will still be necessary to disaggregate and reaggregate data from the management information system in order to develop needed financial statement disclosures. Segment information, while recommended for all issuers of financial statements, is required only for those which have publicly traded debt or equity issues or are in the process of preparing a public offering.

IAS 14 offers detailed guidance on identifying business and geographical segments. The standard requires that entities refer to their organizational structure and internal reporting systems in order to identify these segments. If entities' internal segments are not geographical or products/service-based, then the entities are required to make reference to the next lower level of internal segmentation to identify reportable segments.

The standard sets forth detailed guidance for a dual presentation of segment data. One basis of segmentation is primary and the other secondary. Segment information should be prepared on the basis of the same accounting policies as are the financial statements of the consolidated group or entity. Disclosure requirements for the secondary segments are considerably less detailed than for the primary ones.

Definitions of Terms

Accounting policies

Specific principles, bases, conventions, rules and practices adopted by an entity in preparing and presenting its financial statements.

Business segment

A distinguishable component of an enterprise that is engaged in providing a product or service or group of related products or services, and that is subject to risks and returns that are different from those of other business segments.

Cash flows

Inflows and outflows of cash and cash equivalents.

Common costs

Operating expenses incurred by the enterprise for the benefit of more than one industry segment.

Consolidated financial information

Aggregate (financial) information relating to an enterprise as a whole whether or not the enterprise has consolidated subsidiaries.

Corporate assets

Assets maintained for general corporate purposes and not used in the operations of any industry segment.

Discontinued operation

Resulting from the sale or abandonment of an operation that represents a separate, major line of business of an enterprise; the assets, net profit or loss, and activities can be distinguished physically, operationally, and for financial reporting purposes.

Extraordinary items

Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly.

General corporate expenses

Expenses incurred for the benefit of the corporation as a whole, which cannot be reasonably allocated to any segment.

Geographical segment

Distinguishable component of an enterprise engaged in operations in individual countries or groups of countries within particular geographic areas, as may be determined to be appropriate in the circumstances to reflect the nature of the enterprise's operations.

Identifiable assets

Those tangible and intangible assets used by an industry segment, including those the segment uses exclusively, and an allocated portion of assets used jointly by more than one segment.

Industry segment

A distinguishable component of an enterprise engaged in providing a different product or service or a different group of related products or services, primarily to unaffiliated customers. This term has been superseded by business segment.

Intersegment sales

Transfers of products or services, similar to those sold to unaffiliated customers, between industry segments or geographic areas of the enterprise.

Intrasegment sales

Transfers within an industry segment or geographic area.

Minority interest

That part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned, directly or indirectly through subsidiaries, by the parent.

Operating activities

The principal revenue producing activities of an enterprise and other activities that are not investing or financing activities.

Operating profit or loss

An industry segment's revenue minus all operating expenses, including an allocated portion of common costs.

Ordinary activities

Any activities which are undertaken by an enterprise as part of its business and such related activities in which the enterprise engages in furtherance of, incidental to or arising from, these activities.

Reportable segment

A business or geographical segment for which segment information is required to be disclosed.

Revenue

The gross inflow of economic benefits during a period arising in the ordinary course of business activities from sales to unaffiliated customers and from intersegment sales or transfers, excluding inflows from equity participants.

Segment accounting policies

The policies adopted for reporting the consolidated financial statements of the enterprise, as well as for segment reporting.

Segment assets

Operating assets employed by a segment in operating activities, whether directly attributable or reasonably allocable to the segment; these should exclude those generating revenues or expenses which are excluded from the definitions of segment revenue and segment expense.

Segment expense

Expense that is directly attributable to a segment, or the relevant portion of expense that can be allocated on a reasonable basis to a segment; it excludes extraordinary items, interest expense, losses on sales of investments or extinguishment of debt, equity method losses of associates and joint ventures, income taxes, and corporate expenses not identified with specific segments.

Segment revenue

Revenue that is directly attributable to a segment, or the relevant portion of revenue that can be allocated on a reasonable basis to a segment, and that is derived from transactions with parties outside the enterprise and from other segments of the same enterprise; it excludes extraordinary items, interest and dividend income, and gains on sales of investments or extinguishment of debt.

Transfer pricing

The pricing of products or services between industry segments or geographic areas

Conceptual Basis for Segmental Reporting

As business organizations have become more complex over the years, and the conglomerate form of organization has become ever more popular, it has become necessary to concede that financial statements which present the full scope of an enterprise's operations have declined markedly in utility. While it is certainly possible to assess the overall financial health of the entity using such financial reports, it is much more difficult to evaluate management's operating and financial strategies, particularly with regard to its emphasis on specific lines of business. For example, the extent to which operating results for a period are the result of the development of new products with greater potential for future growth vs. mature product lines which nonetheless still account for a majority of the entity's total sales, would be largely masked in financial statements which did not present results by business segment.

The need for the inclusion of some type of disaggregated information in general-purpose financial reports became critical by the late 1960s, and national accounting rule-making bodies accordingly began to address this topic around that time. In the US, for example, the need for segment information was one of the first agenda items identified upon the FASB's formation in 1973. The original and long operative US requirement, SFAS 14, was promulgated in 1976; while a revised standard, largely (but not entirely) embracing the same approach as does the current IAS 14, was adopted as SFAS 131, effective in 1998. In the UK, the Companies Act of 1967 first mandated the disclosure of limited segment data; this requirement was expanded by later revisions of the Act, and disaggregated information was formally made part of the notes to the financial statements in 1981. A related professional accounting standard (SSAP 25) was adopted in 1990, with segments again defined either by class of business (similar to product or service areas) or by geographic location, with company management charged with the responsibility of determining which type of categorization would be most meaningful to financial statement users. As in the US, a threshold value of 10% is established for making a determination that a segment is material, and the criteria are virtually identical to those in the US under SFAS 14. Information to be disclosed is also modeled on the US requirement—sales, operating results, and identifiable assets (called net assets under the UK standard, but not actually defined there). It is not clear whether the UK standard will be subject to the same sort of revisions as have occurred in the US, Canada, and under the IAS.

On the international standard-setting scene, the relevant rules date from the original IAS 14 issued in 1983. The standard was reformatted, but not substantively altered, in 1995. In 1998 the IASC approved a successor to this standard, revised IAS 14, which is the basis for the following discussion.

Applicability of IAS 14

In contrast to the current US standard on segment reporting (SFAS 131), which affects the financial reports (including interim ones) of only publicly held companies, the first international standard on segment reporting was intended to be applicable to both publicly held and "other economically significant entities." While this term was undefined by that standard, presumably it implied that all business organizations, other than those which are small, locally based, and nondiversified, were expected to apply the requirements of IAS 14.

Revised IAS 14, on the other hand, stipulates that the new standard will be applicable to those entities which have publicly traded equity or debt securities. This will essentially conform the international rules with those of the national standard-setting bodies and limit this standard to publicly held entities. While the logic for presenting disaggregated information in the context of nonpublic enterprises is perhaps equally strong, the counterarguments—that owners and managers already have this information, and that general disclosure could place the entity in jeopardy from a competitive perspective—had been voiced so loudly for such a long time that it was not politically feasible to impose the requirement on privately owned entities.

In determining which segments of a given entity need to be separately presented, there was a contrast between the US approach and that of original IAS 14. This original standard asked that segment information be presented for business or geographic segments whose level of revenues, profits, assets, or employment are significant in the countries in which their major operations are conducted. However, the term significant was not defined, and in fact IAS 14 declined to quantify this threshold, while duly noting that other standard setters had chosen to establish such guidelines, thereby implying that those could be used to fill the vacuum. In the US, the FASB mandated a 10% boundary for recognition, but level of employment was not stipulated as one of the criteria (only assets, revenues, and profits were so identified).

Thus, the intent under original IAS 14 was for the segment data prescribed by that standard to be presented by any entity having substantial activities in more than one industry group or geographic region. It remained a matter of some judgment, however, as to where that threshold was to be placed.

The current IAS 14 takes a very different approach to defining segments and to defining the threshold at which they become reportable segments. Under the new standard, the goal is to disaggregate business and geographical segments which have different risk and return profiles. The new standard sets forth a number of factors which can be used to determine whether the risks and returns are in fact at variance as between two or more segments. Furthermore, it is explicitly intended that the reporting entity's internal organization and financial reporting system should be used to help in making this determination. For example, the way in which the enterprise is organizationally structured should reveal whether geographical segments are defined in terms of location of productive operations or location of customers.

Not only is it necessary to define which of the business and geographical segments are to be deemed reportable, it is also required that a determination be made about whether the business segments or the geographical segments will be the primary mode of segment reporting, with the alternative becoming the secondary mode. This depends, under the terms of the revised standard, upon whether the dominant source and nature of risk and return derives from the products and services it produces, or from operating in different countries or selling into different markets. The amount of information to be disclosed for the primary segments is much greater than for the secondary segments. The lack of quantitative thresholds is consistent with the decision to use the enterprise's internal organization and operation as the driver of the segment reporting model. In other words, a definable portion of the business will be a segment if management behaves as if it is.

Defining Industry and Geographic Segments

Understanding what is meant by industry segments has proven to be a difficult task for many preparers and users of financial statement information, and furthermore, some preparers have been inclined to define a segment in an overly broad fashion, to reduce the amount of disaggregated information which they present. However, there are very legitimate questions which can, and have, been raised on this matter. For one hypothetical example, consider a large manufacturer of a range of automobiles, which entity can convincingly argue that this represents a single segment, while other similar enterprises might hold that a number of segments exist, such as small cars, luxury cars, etc. Under the original IAS 14, the requirements for segment information appeared to tolerate using a liberal interpretation, so that in the foregoing example all automobile manufacturing could have been deemed a single segment.

In the current IAS 14 the IASC has defined segments in terms more consistent with internal managerial decision making. Using the example above, if management makes distinct decisions about the production and marketing of small cars vs. luxury cars, then those would be separate segments for disclosure purposes, regardless of brand names or other artificial distinctions among the product lines. According to the new standard, "an enterprise should look to its system of internal reporting to the board of directors and the chief executive officer for the purpose of identifying its business segments or geographical segments, for both its primary and secondary reporting formats...."

Characteristics of business and geographical segments.

In the event that internally reported segments fail to satisfy the definitions of business and geographical segments, then the criteria in the standard are to be applied to ascertain the identities of the segments.

The standard stipulates the following factors to be considered in determining how to group products and services into business segments:

1. The nature of the products or services;

2. The nature and technology of the production processes;

3. The types of markets in which the products or services are sold;

4. Major classes of customers;

5. The distribution channels and methods for the products; and

6. A unique legislative or regulatory environment relating to part of the business, as might define banks, insurance companies, and utilities.

The following factors can be used to group geographical areas into geographical segments:

1. Proximity of operations;

2. Similarity of economic and political conditions;

3. Relationships between operations in different geographical areas;

4. Special risks associated with operations in a particular country; and

5. Underlying currency risks.

In the absence of internal organizational indicators which suffice to define business and geographical segments, the foregoing criteria should be applied in an attempt to identify primary and secondary segment formats. In that situation, the disclosure of segment data should include a statement to the effect that the externally reported segment data does not conform to that used internally, and the following three supplemental disclosures must be made for each segment which has revenue from sales to external customers amounting to 10% or more of total enterprise revenue from external customers:

1. Segment revenue from external customers;

2. The total carrying amount of segment assets; and

3. Capital expenditures.

Internal indications of segments are to be used whenever possible, however. The informational items to be disclosed for the segments, however they are defined, are discussed below.

Defining Reportable Segments

Reportable segments are business or geographical segments, whether identified either by internal organizational or financial reporting factors, or by application of the criteria set forth above, which meet the threshold test for becoming reportable. A segment will be reportable if a majority of its revenue is earned from sales to external customers, and furthermore

1. Its revenue from sales to external customers and from transactions with internal customers (other segments) is 10% or more of total revenue of all segments, or

2. Its segment result, whether profit or loss, is 10% or more of the combined result of all segments recording a profit or of all segments recording a loss, whichever is the greater in absolute monetary terms, or

3. Its assets are 10% or more of the total assets of all segments.

Thus, the revised IAS 14 essentially has embraced the quantitative criteria of the former US GAAP standard, SFAS 14, regarding the threshold criteria for reportability of individual segments. Note that the segment will be deemed reportable if any one of the three foregoing criteria are satisfied: The test is disjunctive, not conjunctive. However, since only those segments which earn a majority of revenues from external customers are subjected to this testing, those which are essentially vertically integrated will typically not be required to report as separate segments.

Comparative financial statements.

IAS 14 now provides that if a segment were deemed to be reportable in the immediate preceding period (because one or more of the aforenoted 10% thresholds had been exceeded), then even failing each of these tests in the current year would not eliminate the need to present comparable segment data currently. However, this requirement is only applicable if management believes that the segment has continuing significance; absent this, such disclosure could be eliminated. The fact that continuing disclosure is dependent upon management attitudes introduces a subjective element. This may eventually be seen as permitting nondisclosure of important information, and more objective criteria may have to be imposed at some point in time.

Furthermore, if a segment is deemed to be reportable in the current reporting period because it satisfies a relevant threshold test for the first time, the comparative prior period disclosures should be restructured to include that segment as a reportable one, notwithstanding that it did not surpass the 10% thresholds in the prior year. In establishing these two requirements, comparability was obviously given a very substantial weighting.

Segment Reporting

For purposes of complying with IAS 14, segments should be defined in terms of groups of related products or services, or alternatively by types of customers to whom these are provided. It must remain a matter of judgment as to how this guideline is applied, and similar enterprises might reach different conclusions on this. For example, a manufacturer of electronic and mechanical components used in the automobile industry might market these to original equipment manufacturers (OEM) of automobiles and of heavy construction equipment, and also to aftermarket suppliers, in a number of different geographic markets (e.g., Western Europe, the former Eastern Bloc nations of Europe, and the Middle East). In presenting segment data, the entity might reach at least four distinct conclusions on how to define the segments, as follows:

1. It might argue that the entire business represents a single segment;

2. It could find that electronics and mechanical components are essentially different product lines and, thus, that there are two segments of the business;

3. It might conclude that the OEM market is generically different from the aftermarket, thus defining two different segments in another way; or

4. It could reason that automobile OEM, construction equipment OEM, and aftermarket suppliers are each distinct, thus defining three segments of the business for which information is to be disclosed.

Thus, it is clear that managements' judgment will continue to play a large role in financial reporting of industry segments. In reaching their decisions, however, managements should weigh the similarities and differences among the products or services, the risk characteristics of the markets, the growth potential, and the likely future importance of the segment to the entity as a whole. If some parts of the business are subject to particular or unusual regulatory oversight (such as banking typically is), this is a factor which suggests that it might constitute a separate segment for reporting purposes. The fact that a product or service line is produced in an organizationally separate unit, such as a division, may or may not be determinative; thus, internal accounting data might be usable for segment reporting, but might also need to be reclassified for that purpose.

The determination of geographic segments is likewise subject to the application of substantial amounts of judgment. Typically, however, it will be fairly obvious in any given circumstance how the breakdown among regions should be accomplished. The only real question, in most cases, will be how much detail to present. For example, if an enterprise has operations in western Europe and also in former Soviet Bloc nations such as Poland, some might conclude that these are separate segments since their economic systems were so different for so long, and the emerging nations of Eastern Europe represent materially different risks and growth opportunities. Others might conclude that Europe is a single region, based on transportation requirements and other criteria, especially when compared to North American, Latin American, and Asian segments of the same business.

Disclosure Requirements

When it was finally promulgated, the revised IAS 14 required fewer disclosures than had been proposed in the Exposure Draft, but nonetheless does demand a rather expansive set of disclosures. Reporting entities must determine which mode of categorization (i.e., industries or geographical area) is the primary, and which is the secondary, definition of its segment operations. The amount of detail required for the secondary segments is less than for the primary segments.

The determination of primary segmentation is based upon the dominant source of risk and return to the organization. Thus, if an entity's strategic decisions are made primarily in terms of the geographical location of either its operations (e.g., siting of manufacturing plants, sourcing materials, etc.) or its customers, then geographical segments will be the primary reporting format. If, on the other hand, decisions revolve around product or service offerings, then business segments will be the primary format.

In either case, the format not chosen as primary will be used as the secondary mode of segment reporting. Thus, a substantial amount of informative disclosure will result in either instance although somewhat less data is provided for the secondary format than for the primary.

Primary reporting format disclosures.

The following informative disclosures are mandated for each reportable segment:

1. Segment revenue, with separate disclosure of revenue derived from external customers and revenue derived from internal customers (i.e., from other segments). Also, the nature of the segment's revenue should be described, in the manner set forth in IAS 18 (i.e., separately disclosing revenues arising from sales of goods, rendering of services, interest, royalties, dividends, and from the exchange [bartering] of goods and services in each category).

2. Segment result.

3. Interest and dividend income and interest expense directly attributable to the segment or which can be reasonably allocated to the segment, separately—except that this need not be done for reportable segments whose operations are primarily of a financial nature.

4. Total assets at carrying value.

5. Segment liabilities.

6. The contingencies or commitments which can be directly attributed to a reportable segment or allocated on a reasonable basis to segments.

7. Total expenditures to acquire segment assets during the reporting period (typically referred to as capital expenditures).

8. Total depreciation and amortization expense related to segment assets and included in segment results for the reporting period.

9. The nature of any item of revenue or expense which due to size, nature, or incidence needs to be disclosed to explain performance of the segment for the period.

10. The nature and amount of extraordinary items which are directly attributable to a segment or reasonably allocable to it.

11. Significant noncash expenses, other than depreciation and amortization, that were deducted in arriving at segment results.

12. The segment's share of profit or loss of associates, joint ventures or other investments accounted for under the equity method, as well as the investment in that associate or joint venture.

13. A reconciliation of the information presented for reportable segments (the twelve categories above) to the amounts presented in the consolidated or enterprise-wide financial statements. In reconciling revenue, segment revenue from outsiders should be reconciled to total revenue from outside customers; segment results should be reconciled to a comparable measure of enterprise performance as well as to enterprise net income or loss; and segment liabilities should be reconciled to enterprise liabilities.

Secondary reporting format.

The nature of the data presented in the secondary reporting format depends upon which of the two possible criteria determined the primary format, business or geography. If the primary disclosures were based on business segments, then the secondary, geographical, format must contain, for each segment that has sales to external customers or segment assets totaling 10% or more of the comparable enterprise-wide amounts

1. Segment revenue from external customers, determined by the geographical location of customer or market.

2. Total carrying amount of segment assets, determined by geographical location of the assets.

3. The total amount of capital expenditure for the period being reported on, by location of assets.

If the primary mode of reporting segment information is by geographical locations, on the other hand, then the secondary format information will be, for each business segment whose revenue from sales to external customers is 10% or more of total enterprise revenue from external customers, as follows:

1. Segment revenue from external customers.

2. Total carrying amount of segment assets.

3. The total amount of capital expenditures for the period.

Finally, if the entity defines primary segment format in terms of geographical area, based on the location of the production or service facilities, and if the markets in which the goods or services significantly differ from the location of the assets, then revenue from sales to external customers must also be reported by location of markets. The geographical markets to be identified are those whose sales to external customers is 10% or more of the corresponding enterprise total.

Other Disclosures Which May Be Necessary

Disclosures are necessary when a business or geographical segment is not deemed to be reportable because it earns a majority of its revenue from intersegment sales, yet 10% or more of enterprise sales to external customers is comprised of sales to external customers by this segment. This fact should be disclosed, as well as the sales revenue from external and intersegment sales generated by the segment.

The basis for determining prices for intersegment sales should be stated. This should be the same basis that the enterprise actually uses to recognize such transactions for internal reporting purposes. If the method has changed from the previous period, that fact should be adequately disclosed as well.

Segment disclosures are to be prepared using the same accounting principles that the enterprise uses for general external reporting in accordance with international accounting standards. If there have been changes in accounting principles employed at the enterprise level which also impact on segment informative disclosures, these should be dealt with in accordance with IAS 8. Under that standard's benchmark treatment, prior period information is restated to conform with the new principles, unless impracticable to do so. Under the allowed alternative treatment, the cumulative effect of the change in accounting principle is reported as a charge or credit in determining current period net income. If the alternative treatment is utilized, the cumulative effect should be included in segment operating performance, if reasonable allocations can be made, with sufficient disclosure to explain the performance of the segments for the period.

If there have been changes in accounting principles employed in determining segment disclosures, which have a material impact on the data provided to users of the financial statements, such as the method of allocating revenue and expenses to segments, then again consistent with the benchmark treatment stipulated by IAS 8, the comparative prior period information should be restated to conform with the new methods utilized. This is important even though aggregate enterprise amounts will not have been affected by the change, since the users' understanding of segment performance may be distorted unless efforts are made to provide them with insights into these matters.

Unless it is clear from other disclosures or from the body of the financial statements themselves, the segment information should include descriptions of the activities of each reportable business segment and should also indicate the composition of each geographical segment, both for primary and secondary reporting formats. A fair amount of judgment is required in deciding on what information should be provided, but in theory, to take the geographical segment disclosure as an example, such matters as stability of currencies, political risks, and market growth expectations are all potentially useful to recipients of the data and possibly necessary to interpret the financial disclosures most meaningfully. While these are technically voluntary disclosures, in ultimately reaching a judgment as to whether the financial statements are fairly presented, the adequacy of disclosures will have to be weighed.

If an enterprise operates in a single business or geographical segment and therefore is not required to, and does not, report either primary or secondary segment data, that fact should be disclosed and the nature of its business segment or geographical operations should be stated. In some cases an entity will operate within a single segment, but derive revenues from a number of diverse products or services; in such instances, the new standard requires that these be described and the amounts of revenues derived from any such group of products or services which constitute 10% or more of enterprise revenue should be set forth. This clearly will require the exercise of judgment, since there will be a thin line between such disclosures and the admission that the entity, in fact, is operating in more than a single segment and thus should have made the full set of informative disclosures required by IAS 14.

Finally, if the aggregate revenue from external customers from all reportable segments totals less than 75% of the revenue reported by the entity as a whole, the standard requires that there be a general description of the nature of the remaining sources of revenue. This would normally occur when the balance of revenues are derived from a range of individually minor activities which do not constitute a single segment or group of segments. In practice, this situation will not occur very often, as the defined and reportable segments will typically add to more than the 75% threshold level.

Revisions to Definitions of Segments

Over time, an entity may determine that the definition of industry or of geographic segments needs to be revised. The effect of making such a change could be to make information presented in earlier years no longer comparable to that currently presented in the financial statements. Accordingly, at a minimum, the fact of having made this change must be disclosed, with a sufficient description so that users can appreciate the general impact that change might have had. The reasons why the change was made, such as to better reflect the way management is currently making decisions about the segments of the business, should also be stated. If reasonably determinable, the actual effect of the change should be disclosed.

As an example, the manufacturer of electronic and mechanical automobile parts used in the example below might at some point conclude that its former manner of presentation of segment data as a dichotomy between electronic and mechanical products is no longer meaningful given the growing pervasiveness of electronic components in what had previously been entirely mechanical items. Thus, the entity might determine that a more useful categorization would be by type of customer, for example, original equipment manufacturers (OEM) vs. aftermarket, since the underlying economic forces differ substantially between these. In the year of the change in presentation, the fact of the change and the logic for it should be presented, and if possible the prior period's data, which had been presented earlier on the basis of product type, should be restated on the newly adopted basis of customer class. By doing this, the users of the financial statements would be able to understand the trends affecting the segments as they are currently being defined.

Comprehensive example of segment reporting

To illustrate the expansion of reporting requirements under IAS 14, a comprehensive illustration is given below. The facts assumed are as follows, as these would have been presented in conformity with the original IAS 14:

(All amounts in $ millions)

Electronic components Mechanical components

Net sales

• 2002 345.0 228.6

• 2003 378.5 219.8

Operating profit

• 2002 29.6 13.2

• 2003 36.0 8.5

Capital expenditures

• 2002 12.1 3.5

• 2003 21.4 2.5

Identifiable assets

• 2002 122.9 128.4

• 2003 140.2 118.5

Depreciation and amortization

• 2002 13.7 15.9

• 2003 17.5 13.6

Unallocated (corporate) assets totaled $7.6 million in 2002 and $8.1 million in 2003. Unallocated corporate expenses equaled $3.4 million in 2002 and $4.5 million in 2003. Intersegment sales, which are made at cost, are not material in amount. Operating profit by segment is defined as third-party sales less operating expenses; corporate overhead and financing costs are excluded from segment expenses.

Revenue by geographic area is summarized below.

(All amounts in $ millions)

Western Europe Eastern Europe Middle East

Net sales

• 2002 348.8 113.4 111.7

• 2003 366.3 133.4 98.6

Operating profit

• 2002 22.7 8.6 11.5

• 2003 20.6 13.9 10.0

Identifiable assets

• 2002 178.4 63.2 9.7

• 2003 183.3 69.5 5.9

Western Europe includes primarily Germany and France, with a relatively small amount of activity in Belgium and the Netherlands. Eastern Europe includes Hungary, Poland, Slovakia and the Czech Republic. The Middle East is principally Lebanon and Syria, with a small level of activity in Egypt and Saudi Arabia. Sales in the Middle East are made almost entirely to aftermarket suppliers, whereas revenues derived from European markets are predominantly from original equipment manufacturers of automobiles and construction equipment. Approximately 12% and 14% of sales in Western Europe, for 2002 and 2003, respectively, were made to aftermarket suppliers; for Eastern European sales, the corresponding percentages were 19% and 23% for 2002 and 2003, respectively.

It is assumed that management has determined that the primary reporting format should be by business segment; the secondary reporting format, therefore, will by geographical segment. What follows is the set of required disclosures to conform with IAS 14:

Note 10: Segment information

Management has determined that the primary determinant of its decision making is the major products offered by the company, with lesser attention being based on geographical location of its customers. Accordingly, the primary disclosures, below, are based on business segment, alternatively, electronic or mechanical components, with the following secondary disclosures based on geographic location of customers.

(All amounts in $ millions)

Electronic components Mechanical components

Net sales

• 2002—In total 345.0 228.6

• 2002—To external customers 336.3 228.6

• 2002—Intersegment sales 8.7 0.0

• 2003—In total 378.5 219.8

• 2003—To external customers 371.0 219.5

• 2003—Intersegment sales 7.5 .3

Operating profit

• 2002 29.6 13.2

• 2003 36.0 8.5

Interest and dividend income

• 2002—Interest income 1.2 .2

• 2002—Dividend income .1 0

• 2003—Interest income 1.1 .3

• 2003—Dividend income 0 0

Interest expense

• 2002 1.5 1.1

• 2003 1.2 1.0

Identifiable assets, at net carrying amounts

• 2002 122.9 128.4

• 2003 140.2 118.5

Segment liabilities

• 2002 62.3 43.4

• 2003 59.6 40.1

Contingent liabilities related to contractual disputes

• 2002 2.5 1.0

• 2003 4.4 1.2

Capital expenditures

• 2002 12.1 3.5

• 2003 21.4 2.5

Depreciation and amortization

• 2002 13.7 15.9

• 2003 17.5 13.6

Nonrecurring items

• 2002—Revenue from government contract 6.7 0

• 2003—Gain from settlement of patent suit 2.3 0

Equity in income of investee

• 2002 2.2 0

• 2003 .5 0

Investment in equity method investee

• 2002 5.6 0

• 2003 6.9 0

Segment information is reconciled to corresponding enterprise totals in the following section:

Net sales

• 2002—To external customers

o Electronic components 336.3

o Mechanical components 228.6

o

 Enterprise total sales 564.9

• 2003—To external customers

o Electronic components 371.0

o Mechanical components 219.5

o

 Enterprise total sales 590.5

Operating profit

• 2002

o Electronic components 29.6

o Mechanical components 13.2

o Less: Unallocated corporate expenses (3.4)

o

 Enterprise total operating profit 39.4

• 2003

o Electronic components 36.0

o Mechanical components 8.5

o Less: Unallocated corporate expenses (4.5)

o

 Enterprise total operating profit 40.0

Identifiable assets, at net carrying amounts

• 2002

o Electronic components 122.9

o Mechanical components 128.4

o Unallocated corporate assets 7.6

o

 Enterprise total assets 258.9

• 2003

o Electronic components 140.2

o Mechanical components 118.5

o Unallocated corporate assets 8.1

o

 Enterprise total assets 266.8

Segment liabilities

• 2002

o Electronic components 62.3

o Mechanical components 43.4

o

 Enterprise total liabilities 105.7

• 2003

o Electronic components 59.6

o Mechanical components 40.1

o

 Enterprise total liabilities 99.7

Revenue by geographic area is summarized below (based on location of customers).

(All amounts in $ millions)

Western Europe Eastern Europe Middle East

Net sales

• 2002 348.8 113.4 111.7

• 2003 366.3 133.4 98.6

Identifiable assets

• 2002 178.4 63.2 9.7

• 2003 183.3 69.5 5.9

Capital expenditures

• 2002 8.2 4.4 3.0

• 2003 12.5 5.5 5.9

Western Europe includes primarily Germany and France, with a relatively small amount of activity in Belgium and the Netherlands. Eastern Europe includes Hungary, Poland, Slovakia and the Czech Republic. The Middle East is principally Lebanon and Syria, with a small level of activity in Egypt and Saudi Arabia. Sales in the Middle East are made almost entirely to aftermarket suppliers, whereas revenues derived from European markets are predominantly from original equipment manufacturers of automobiles and construction equipment. Approximately 12% and 14% of sales in Western Europe, for 2002 and 2003, respectively, were made to aftermarket suppliers; for Eastern European sales, the corresponding percentages were 19% and 23% for 2002 and 2003, respectively.[/align:193022a5de]

 

 

محمد بشارة - أبوعبدالله

أستغفر الله العظيم واتوب اليه

رابط هذا التعليق
شارك

  • بعد 3 أسابيع...

انشئ حساب جديد أو قم بتسجيل دخولك لتتمكن من إضافة تعليق جديد

يجب ان تكون عضوا لدينا لتتمكن من التعليق

انشئ حساب جديد

سجل حسابك الجديد لدينا في الموقع بمنتهي السهوله .

سجل حساب جديد

تسجيل دخول

هل تمتلك حساب بالفعل؟ سجل دخولك من هنا.

سجل دخولك الان
×
×
  • أضف...