IASB issues segment reporting exposure draft
19 Jan 2006
The IASB has issued an Exposure Draft of an International Financial Reporting Standard (IFRS) ED 8 'Operating Segments'.
The proposals are part of the IASB's efforts to converge IFRSs and US GAAP.
ED 8 results from the IASB's comparison of IAS 14 Segment Reporting with the US standard SFAS 131 Disclosures about Segments of an Enterprise and Related Information.
The proposed IFRS would replace IAS 14 and align segment reporting with the requirements of SFAS 131. ED 8 would require an entity to adopt the 'management approach' to reporting on the financial performance of its operating segments.
Generally, the information to be reported would be what management uses internally for evaluating segment performance and deciding how to allocate resources to operating segments. Such information may be different from what is used to prepare the income statement and balance sheet. The proposals would therefore require explanations of the basis on which the segment information is prepared and reconciliations to the amounts recognised in the income statement and balance sheet.
The proposed IFRS would apply to the annual financial statements for periods beginning on or after 1 January 2007, with earlier application encouraged. Comment deadline is 19 May 2006.
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