Question

Describe the differences between GAAP and IFRS regarding the disclosure requirements of significant operating segments?

Answer 1

Information to be disclosed by operating segment.
1.General information about the operating segment including factors used to identify operating segments and the types of products and services from which each segmentderives its revenues.
2.Segment profit or loss and the following components of profit or loss.
a.Revenues from external customers.
b.Revenues from transactions with other operating segments.
c.Interest revenue and interest expense (reported separately).
d.Depreciation, depletion, and amortization expense.
e.Other significant noncash items included in segment profit or loss.
f.Unusual items (discontinued operations and extraordinary items).
g.Income tax expense or benefit.
3.Total segment assets and the following related items.
a.Investment in equity method affiliates.
b.Expenditures for additions to long-lived assets

Entity-wide disclosures.
A.Information about products and services.
1.Additional information must be provided if operating segments have not beendetermined based on differences in products and services, or if the enterprise hasonly one operating segment.
2.In those situations, revenues derived from transactions with external customersmust be disclosed by product or service.
B.Information about geographic areas.
1.Revenues from external customers and long-lived assets must be reported for

(a)the domestic country,
(b) all foreign countries in which the enterprise has assets orderives revenues, and

(c ) each individual foreign country in which the enterprisehas material revenues or material long-lived assets.
2.The FASB does not provide any specific guidance with regard to determining materiality of revenues or long-lived assets; this is left to management’s judgment.
C.Information about major customers.
1.The volume of sales to a single customer must be disclosed if it constitutes 10 percent or more of total sales to unaffiliated customers.
2.The identity of the major customer need not be disclosed.

There are majorly three differences between IFRS 8- operating segments and US GAAP

1)IFRS REQUIRES DISCLOSURE OF TOTAL ASSETS AND TOTAL LIABILITIES BY OPERATING SEGMENT IF THESE ARE REGULARY REPORTED TO THE CHIEF OPERATING DECISION MAKER.
US GAAP REQUIRES DISCLOSURE OF SEGMENT ASSETS BUT DOES NOT REQUIRE DISCLOSURE OF SEGMENT LIABILITIES

2)IFRS SPECIFICALLY INCLUDES INTAGIBLES IN THE SCOPE OF "NON-CURRENT ASSETS" TO BE DISCLOSED BY GEOGRAPHIC AREA.US GAAP INDICATES THAT "LONG LIVED ASSETS" TO BE DISCLOSED BY GEOGRAPHIC AREA EXCLUDES INTAGIBLES

3)US GAAP REQUIRES AN ENTITY WITH A MATRIX FORM OF ORGANIZATION TO DETERMINE OPERATING SEGMENTS BASED ON PRODUCTS AND SERVICES.IFRS 8 ALLOWS SUCH AN ENTITY TO DETERMINE OPERATING SEGMENTS BASED ON EOTHER PRODUCTS AND SERVICES OR GEOGRAPHIC AREAS

NOTE:IFRS and U.S. GAAP require entity-wide disclosures related to:
a. products and services – if operating segments are not organized along these lines.
b. major customers – which is any customer from which the enterprise generates 10% or more of its revenue
c. geographic areas – if operating segments are not organized geographically