Question 1

In accordance with AASB 8"Operating Segments", which of the following statements is incorrect?

Accepted Answer

A)  The standard requires an entity to report financial and descriptive information about its reportable segments. 
B)  Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. 
C)  The standard requires an entity to report a measure of operating segment profit or loss and of segment assets. 
D)  Reportable segments exclude business activities for which it has yet to earn revenues (e.g. start-up operations). 
E)  None of the given answers 
A)  The standard requires an entity to report financial and descriptive information about its reportable segments. 
B)  Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. 
C)  The standard requires an entity to report a measure of operating segment profit or loss and of segment assets. 
D)  Reportable segments exclude business activities for which it has yet to earn revenues (e.g. start-up operations). 
E)  None of the given answers D

Question 2

According to AASB 8, "where total external revenues attributable to reportable segments constitute less than 75 per cent of the entity's total revenues"...

Accepted Answer

A)  additional reportable segments must be identified in accordance with the definition of reportable segments, until at least 75 per cent of the entity's total revenues are included in reportable segments. 
B)  the entity reports those segments already identified as reportable, even though they constitute less than 75 per cent of the entity's total revenues. 
C)  additional segments must be identified as reportable segments, even if they do not qualify as reportable segments, until at least 75 per cent of the entity's total revenues are included in reportable segments. 
D)  the entity considers whether total external revenues attributable to reportable segments constitute greater than 75 per cent of the entity's total external revenues, and if so, report those segments already identified. 
E)  the entity considers whether total assets of the reportable segments constitute greater than 75 per cent of the entity's total assets, and if so, report those segments already identified. 
A)  additional reportable segments must be identified in accordance with the definition of reportable segments, until at least 75 per cent of the entity's total revenues are included in reportable segments. 
B)  the entity reports those segments already identified as reportable, even though they constitute less than 75 per cent of the entity's total revenues. 
C)  additional segments must be identified as reportable segments, even if they do not qualify as reportable segments, until at least 75 per cent of the entity's total revenues are included in reportable segments. 
D)  the entity considers whether total external revenues attributable to reportable segments constitute greater than 75 per cent of the entity's total external revenues, and if so, report those segments already identified. 
E)  the entity considers whether total assets of the reportable segments constitute greater than 75 per cent of the entity's total assets, and if so, report those segments already identified. C

Question 3

Identification of operating segments in AASB 8 "Operating Segments" adopts a 'rules-based' approach, while its predecessor AASB 114 "Segment Reporting" adopts a 'principles-based' approach.

Accepted Answer

A) True 
 B)False  False

Question 4

The following information relates to Baggins Ltd and its Bilbo segment.
 
In accordance with AASB 8 "Operating Segment", in which years is the Bilbo segment a reportable?

Accepted Answer

A)  2011, 2012 and 2013; 
B)  2012, 2013 and 2014; 
C)  2011 and 2012; 
D)  2013 and 2014; 
E)  2014 and 2015; 
A)  2011, 2012 and 2013; 
B)  2012, 2013 and 2014; 
C)  2011 and 2012; 
D)  2013 and 2014; 
E)  2014 and 2015;

Question 5

The following information is provided for Gandalf LtD.
 
The only inter-segment sales within the entity are that the marine transport segment's revenues are 35 per cent from inter-segment sales and the light manufacturing segment has 60 per cent of its sales generated through inter-segment sales. Which segments are reportable according to the guidelines provided in AASB 114?

Accepted Answer

A)  Business segments: Retailing, marine transport, general insurance; Geographical segments: Australia, US. 
B)  Business segments: Retailing, light manufacturing, marine transport, general insurance; Geographical segments: Australia, Europe, US. 
C)  Business segments: Retailing, light manufacturing, marine transport, general insurance; Geographical segments: Australia, US. 
D)  Business segments: Retailing, light manufacturing, mining, marine transport, general insurance; Geographical segments: Australia, Europe, US. 
E)  None of the given answers. 
A)  Business segments: Retailing, marine transport, general insurance; Geographical segments: Australia, US. 
B)  Business segments: Retailing, light manufacturing, marine transport, general insurance; Geographical segments: Australia, Europe, US. 
C)  Business segments: Retailing, light manufacturing, marine transport, general insurance; Geographical segments: Australia, US. 
D)  Business segments: Retailing, light manufacturing, mining, marine transport, general insurance; Geographical segments: Australia, Europe, US. 
E)  None of the given answers.

Question 6

A geographical segment is defined in part by AASB 8 as being a distinguishable component of an entity engaged in providing products and services within a particular social and cultural environment:

Accepted Answer

A) True 
 B)False

Question 7

AASB 8 "Operating Segments" requires an entity to report a measure of segment liabilities and particular income and expense items, if such measures are regularly provided to the chief operating officer.

Accepted Answer

A) True 
 B)False

Question 8

If a financial report contains both the consolidated financial statements of a parent and the parent's separate financial statements, segment information is required for both statements.

Accepted Answer

A) True 
 B)False

Question 9

The following segment information relates to Tolkein Enterprises:
 
Applying the tests for identifying a reportable segment in accordance with AASB 8, which of the above segments qualify for reporting and do the segments satisfy the 75 per cent test?

Accepted Answer

A)  Reportable segments: Mechanical engineering and retailing, 75 per cent test satisfied. No 
B)  Reportable segments: Industrial manufacturing, mechanical engineering and retailing; 75 per cent test satisfied. Yes 
C)  Reportable segments: Project consulting, mechanical engineering and retailing; 75 per cent test satisfied. Yes 
D)  Reportable segments: Industrial manufacturing, project consulting, mechanical engineering and retailing; 75 per cent test satisfied. No 
E)  None of the given answers. 
A)  Reportable segments: Mechanical engineering and retailing, 75 per cent test satisfied. No 
B)  Reportable segments: Industrial manufacturing, mechanical engineering and retailing; 75 per cent test satisfied. Yes 
C)  Reportable segments: Project consulting, mechanical engineering and retailing; 75 per cent test satisfied. Yes 
D)  Reportable segments: Industrial manufacturing, project consulting, mechanical engineering and retailing; 75 per cent test satisfied. No 
E)  None of the given answers.

Question 10

AASB 8 identifies five factors that are to be considered in determining whether or not products and services are related for the purposes of defining a business segment. It further specifies that the products and services included in a business segment must be similar with respect to all these factors:

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not likely to be a "chief operating decision maker" as referred to in AASB 8 "Operating Segments"?

Accepted Answer

A)  Executive committee of the board 
B)  Chief executive officer; 
C)  Chief operating officer; 
D)  Chief accountant; 
E)  President of the reporting entity 
A)  Executive committee of the board 
B)  Chief executive officer; 
C)  Chief operating officer; 
D)  Chief accountant; 
E)  President of the reporting entity

Question 12

A business segment is defined by AASB 8 as:

Accepted Answer

A)  A component of an entity that is of separable and identifiable interest to a section of stakeholders of the entity. 
B)  A distinguishable component of an entity and that component is engaged in providing an individual product or service or group of related products or services and is subject to risks and returns that are different from those of other distinguishable components of the entity. 
C)  An identifiable component of an entity that is engaged in providing an individual product or service to other entities within the group and is subject to special risks and returns as a result of relying on other components of the entity. 
D)  An identifiable component of an entity based on functional relationships with suppliers or customers or financiers established over a period of time. 
E)  None of the given answers. 
A)  A component of an entity that is of separable and identifiable interest to a section of stakeholders of the entity. 
B)  A distinguishable component of an entity and that component is engaged in providing an individual product or service or group of related products or services and is subject to risks and returns that are different from those of other distinguishable components of the entity. 
C)  An identifiable component of an entity that is engaged in providing an individual product or service to other entities within the group and is subject to special risks and returns as a result of relying on other components of the entity. 
D)  An identifiable component of an entity based on functional relationships with suppliers or customers or financiers established over a period of time. 
E)  None of the given answers.

Question 13

The core principle of AASB 8 "Operating Segments" is for a reporting entity to disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

Accepted Answer

A) True 
 B)False

Question 14

AASB 8 requires that:

Accepted Answer

A)  Reportable segments must individually constitute less than 75 per cent of the entity's total revenues. 
B)  The total revenues attributable to the reportable segments must be equal to or greater than 75 per cent of the entity's total revenues. 
C)  The total external revenues attributable to reportable segments must equal at least 75 per cent of the entity's total revenues. 
D)  The sum of the individual reportable segment's profits or losses must be equal to or greater than 75 per cent of the entity's absolute amount of profit or loss. 
E)  None of the given answers. 
A)  Reportable segments must individually constitute less than 75 per cent of the entity's total revenues. 
B)  The total revenues attributable to the reportable segments must be equal to or greater than 75 per cent of the entity's total revenues. 
C)  The total external revenues attributable to reportable segments must equal at least 75 per cent of the entity's total revenues. 
D)  The sum of the individual reportable segment's profits or losses must be equal to or greater than 75 per cent of the entity's absolute amount of profit or loss. 
E)  None of the given answers.

Question 15

Managers may choose to provide segment data voluntarily because:

Accepted Answer

A)  They want to highlight the companies in the group that are doing well. 
B)  Managers generally do not believe that consolidated accounts are meaningful. 
C)  The segment information will demonstrate more accurately where they have done well and where they have done badly. 
D)  It demonstrates a greater level of accountability that may attract investment funds. 
E)  None of the given answers. 
A)  They want to highlight the companies in the group that are doing well. 
B)  Managers generally do not believe that consolidated accounts are meaningful. 
C)  The segment information will demonstrate more accurately where they have done well and where they have done badly. 
D)  It demonstrates a greater level of accountability that may attract investment funds. 
E)  None of the given answers.

Question 16

According to AASB 114, factors to be considered in aggregating operating segments include:

Accepted Answer

A)  A similar production process. 
B)  Exchange control regulations. 
C)  A common communications network. 
D)  A similar regulatory environment. 
E)  None of the given answers. 
A)  A similar production process. 
B)  Exchange control regulations. 
C)  A common communications network. 
D)  A similar regulatory environment. 
E)  None of the given answers.

Question 17

The guidelines to determine that a segment is reportable in accordance with AASB 8 "Operating Segments" includes:

Accepted Answer

A)  The segment's assets are equal to or greater than 10 per cent of the entity's total assets. 
B)  The expenses of the segment that relate to external sales are equal to or greater than 10 per cent of total segment expenses. 
C)  The segment's assets are 10 per cent or more of the combined assets of all operating segments. 
D)  The expenses of the segment that relate to external and internal sales are equal to or greater than 10 per cent of total segment expenses. 
E)  None of the given answers. 
A)  The segment's assets are equal to or greater than 10 per cent of the entity's total assets. 
B)  The expenses of the segment that relate to external sales are equal to or greater than 10 per cent of total segment expenses. 
C)  The segment's assets are 10 per cent or more of the combined assets of all operating segments. 
D)  The expenses of the segment that relate to external and internal sales are equal to or greater than 10 per cent of total segment expenses. 
E)  None of the given answers.

Question 18

The following information relates to Aragorn Ltd and its Mordor segment.
 
In which years would the Mordor segment be classified as a reportable segment according to AASB 8?

Accepted Answer

A)  2001, 2003 and 2005. 
B)  2001, 2002, 2003 and 2005. 
C)  2002, 2003, 2004 and 2005. 
D)  2003 and 2005 
E)  None of the given answers 
A)  2001, 2003 and 2005. 
B)  2001, 2002, 2003 and 2005. 
C)  2002, 2003, 2004 and 2005. 
D)  2003 and 2005 
E)  None of the given answers

Question 19

Gollum Ltd provides the following segment information:
 
There are no inter-segment sales. Which of the segments are reportable applying only the segment result test?

Accepted Answer

A)  Business segments: Industrial manufacturing, project consulting, retailing, agriculture; Geographical segments: Australia, Pacific Islands, US. 
B)  Business segments: Industrial manufacturing, project consulting; Geographical segments: Australia. 
C)  Business segments: Industrial manufacturing, project consulting, mechanical engineering, retailing, agriculture; Geographical segments: Australia, Pacific Islands, US. 
D)  Business segments: Industrial manufacturing, project consulting, agriculture; Geographical segments: Australia, Pacific Islands. 
E)  None of the given answers. 
A)  Business segments: Industrial manufacturing, project consulting, retailing, agriculture; Geographical segments: Australia, Pacific Islands, US. 
B)  Business segments: Industrial manufacturing, project consulting; Geographical segments: Australia. 
C)  Business segments: Industrial manufacturing, project consulting, mechanical engineering, retailing, agriculture; Geographical segments: Australia, Pacific Islands, US. 
D)  Business segments: Industrial manufacturing, project consulting, agriculture; Geographical segments: Australia, Pacific Islands. 
E)  None of the given answers.

Question 20

AASB 8 "Operating Segments" requires reconciliation of total reportable segment revenues, total profit or loss, total assets, total liabilities and other amounts disclosed for reportable segments to the corresponding amounts shown in the parent entity's separate financial statements.

Accepted Answer

A) True 
 B)False

Exam 25: Segment Reporting

In accordance with AASB 8"Operating Segments", which of the following statements is incorrect?

According to AASB 8, "where total external revenues attributable to reportable segments constitute less than 75 per cent of the entity's total revenues"...

Identification of operating segments in AASB 8 "Operating Segments" adopts a 'rules-based' approach, while its predecessor AASB 114 "Segment Reporting" adopts a 'principles-based' approach.

The following information relates to Baggins Ltd and its Bilbo segment. In accordance with AASB 8 "Operating Segment", in which years is the Bilbo segment a reportable?

A geographical segment is defined in part by AASB 8 as being a distinguishable component of an entity engaged in providing products and services within a particular social and cultural environment:

AASB 8 "Operating Segments" requires an entity to report a measure of segment liabilities and particular income and expense items, if such measures are regularly provided to the chief operating officer.

If a financial report contains both the consolidated financial statements of a parent and the parent's separate financial statements, segment information is required for both statements.

The following segment information relates to Tolkein Enterprises: Applying the tests for identifying a reportable segment in accordance with AASB 8, which of the above segments qualify for reporting and do the segments satisfy the 75 per cent test?

Which of the following is not likely to be a "chief operating decision maker" as referred to in AASB 8 "Operating Segments"?

A business segment is defined by AASB 8 as:

The core principle of AASB 8 "Operating Segments" is for a reporting entity to disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

AASB 8 requires that:

Managers may choose to provide segment data voluntarily because:

According to AASB 114, factors to be considered in aggregating operating segments include:

The guidelines to determine that a segment is reportable in accordance with AASB 8 "Operating Segments" includes:

The following information relates to Aragorn Ltd and its Mordor segment. In which years would the Mordor segment be classified as a reportable segment according to AASB 8?

Gollum Ltd provides the following segment information: There are no inter-segment sales. Which of the segments are reportable applying only the segment result test?

AASB 8 "Operating Segments" requires reconciliation of total reportable segment revenues, total profit or loss, total assets, total liabilities and other amounts disclosed for reportable segments to the corresponding amounts shown in the parent entity's separate financial statements.

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financ

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluation and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Lease

Set-Off and Extinguishment of Debt

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in E

Accounting for Share-Based Payments

Accounting for Income Taxes

Cash-Flow Statements

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After Balance Sheet Date

Related-Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transact

Further Consolidation Issues Ii: Accounting for Minority Interests

Further Consolidation Issues Iii: Accounting for Indirect Ownershi

Further Consolidation Issues Iv: Accounting for Changes in the Deg

Accounting for Equity Investments

Accounting for Equity Investments

Accounting for Foreign Currency Transactions

Translation of the Accounts of Foreign Operations

Accounting for Corporate Social Responsibility

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