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Exam 22: Operating Segments

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Question 1

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Segment disclosures are designed to:

A) combine components of consolidated financial data to provide a higher level of summarisation;
B) condense particular items of consolidated financial data into one financial statement;
C) disaggregate selected consolidated financial data;
D) aggregate revenues and expenses so that only net profit is shown for each important segment.

E) A) and D)
F) A) and C)

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Question 2

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If an operating segment does not meet all of the thresholds of significance, it:

A) may not be designated as a reportable segment;
B) may still be designated as a reportable segment;
C) must be combined with the largest of the other segments and reported in aggregate;
D) is insignificant and cannot be reported separately.

E) C) and D)
F) A) and B)

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Question 3

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A key objective of providing financial reporting information by segment is:

Based on the information provided below, which business unit(s) should be identified as TeeVee Ltd's operating segment(s) ? $\begin{array} { | l | c | c | c | } \hline & \text { Glee } & \text { Homrland } & \text { GSI } \\\hline \begin{array} { l } \text { Can the component } \\\text { generate revenue and } \\\text { incur expenses from its } \\\text { business activities? }\end{array} & \text { Yes } & \text { Yes } & \text { Yes } \\\hline \begin{array} { l } \text { Are the component's } \\\text { operating results } \\\text { regularly revienved by } \\\text { the CODM? }\end{array} & \text { Yes } & \text { Yes } & \text { No } \\\hline \begin{array} { l } \text { Is discrete financial } \\\text { information available } \\\text { for the component? }\end{array} & \text { No } & \text { Yes }& \text { Yes } \\\hline\end{array}$

Huey, Dewey, and Louie are the three operating segments of Donald Company. Which of the following statements is correct based on the information provided below? $\begin{array}{|l|r|r|r|r|r|r|}\hline {\text { In } \mathbf{\$ 0 0 0}} &{\text { Huey }} & {\text { Dewey }} &{\text { Louie }} & {\begin{array}{c}\text { Total } \\\text { operating } \\\text { segments }\end{array}} &{\begin{array}{c}\text { Other } \\\text { business } \\\text { units }\end{array}} &{\begin{array}{c}\text { Total } \\\text { Donald } \\\text { Company }\end{array}} \\\hline \text { Revenue } & 275 & 130 & 410 & 815 & 295 & 1110 \\\hline \text { Profit/loss } & 100 & 30 & 185 & 315 & 60 & 375 \\\hline \text { Assets } & 355 & 215 & 750 & 1320 & 310 & 1630 \\\hline\end{array}$

Bloomsville Ltd has a board of directors that consist of a Managing Director (MD) and non-executive directors. The MD has a regular monthly meeting with the Chief Operating Officer (COO) and the managers of Bloomsville's three business units. During the meeting, each manager would present an update of their unit's financial performance. The financial information is then reviewed by the MD and the COO to assess the performance of each business unit and to make decisions related to resource allocation. In this case, who is the CODM of Bloomsville?

Under AASB 8, entities are required to provide reconciliations on the followings, except for:

Compared to AASB 114 Segment Reporting, AASB 8 Operating Segments can be described as being:

Assuming the three business units below are operating segments and all revenue earned are from external customers, in which of the following scenarios does Colourband Ltd need to identify another reportable segment to be disclosed? $\begin{array}{|c|r|r|r|r|r|r|}\hline \begin{array}{c}\text { Revenue } \\\text { in } \mathbf{\$ 0 0 0}\end{array} & \text { Red } & {\text { Blue }} & \text { Green } &{\begin{array}{c}\text { Total } \\\text { operating } \\\text { segments }\end{array}} & {\begin{array}{c}\text { Other } \\\text { business } \\\text { units }\end{array}} &{\begin{array}{c}\text { Total } \\\text { Colourband } \\\text { Ltd }\end{array}} \\\hline \text { I. } & 75 & 160 & 320 & 555 & 250 & 805 \\\hline \text { II. } & 110 & 140 & 275 & 525 & 175 & 700 \\\hline \text { III. } & 230 & 250 & 375 & 855 & 315 & 1170 \\\hline\end{array}$

What is the reasonable maximum number of an entity's reportable segments according to the additional guidance provided in AASB 8?

Which of the following information is not required to be disclosed by entities complying with AASB 8?

Which of the followings are the requirements under AASB 8? $\begin{array} { | l | l | l | l | } \hline \text { I. } & \begin{array} { l } \text { Identifying primary and secondary } \\\text { segments. }\end{array} & \text { N. } & \begin{array} { l } \text { Identifying operating segments based on } \\\text { predominant sources of risks and returns. }\end{array} \\\hline \text { II. } & \begin{array} { l } \text { Disclosure of reliance on major external } \\\text { customers. }\end{array} & \text { V. } & \begin{array} { l } \text { Prepar ing segment information in } \\\text { conformity with accounting policies for } \\\text { prepar ing financial statements. }\end{array} \\\hline \text { III. } & \begin{array} { l } \text { Disclosure of a measure of profit or loss } \\\text { and total assets. }\end{array} & \text { V. } & \begin{array} { l } \text { Does not distinguish between revenues } \\\text { and expenses from internal and external } \\\text { customers. }\end{array} \\\hline\end{array}$ Enues and expenses from internal and external customers.or preparing financial statements.

Under AASB 8, two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of the standard, the segments have similar economic characteristics, and the segments are similar in each of the following respects: I. $\quad$ the nature of the production processes II. $\quad$ the markets in which the products are sold are closely related III. $\quad$ the type or class of customer for their products and services IV. $\quad$ the nature of the regulatory environment

For financial reporting periods commencing prior to 1 January 2009, the accounting standard relating to segment reporting was:

CODM refers to:

Additional segments must be identified as reportable segments until at least:

AASB 8 prescribes that an operating segment must be identified on the basis of:

AASB 8 requires disclosure in relation to which of the following?

Which of the following statements is incorrect? AASB 8 requires external revenue by product to be disclosed on an entity wide basis by all entities to which AASB 8 applies:

Which of the following statements is correct about the controversial issues surrounding AASB 8?