Question 1

In the situation where an entity has invested in segments that are diverse:

Accepted Answer

A)  Segment information should enable the users of the financial statements to better predict the future profitability of the entity. 
B)  Segment information should enable the users of the financial statements to better predict the risk exposure of the entity. 
C)  Segment information is less useful because according to portfolio theory investments that are not correlated reduce the risk of an entity. 
D)  Segment information should enable the users of the financial statements to better predict the future profitability of the entity and segment information should enable the users of the financial statements to better predict the risk exposure of the entity. 
E)  None of the given answers. 
A)  Segment information should enable the users of the financial statements to better predict the future profitability of the entity. 
B)  Segment information should enable the users of the financial statements to better predict the risk exposure of the entity. 
C)  Segment information is less useful because according to portfolio theory investments that are not correlated reduce the risk of an entity. 
D)  Segment information should enable the users of the financial statements to better predict the future profitability of the entity and segment information should enable the users of the financial statements to better predict the risk exposure of the entity. 
E)  None of the given answers.

Question 2

Situations in which aggregated data may be sufficient to evaluate the performance of an entity include:

Accepted Answer

A)  Where the entity has not existed for a long period of time. 
B)  Where the segments of the entity have highly correlated profit prospects. 
C)  Where the entity has a large consolidated asset base. 
D)  Where the entity operates in different geographic areas with different risks. 
E)  None of the given answers. 
A)  Where the entity has not existed for a long period of time. 
B)  Where the segments of the entity have highly correlated profit prospects. 
C)  Where the entity has a large consolidated asset base. 
D)  Where the entity operates in different geographic areas with different risks. 
E)  None of the given answers.

Question 3

Information about operating segments that do not meet any of the quantitative thresholds:

Accepted Answer

A)  should be ignored. 
B)  shall be combined and disclosed in an "all other segments" category. 
C)  should be combined with other segments that exhibit similar economic characteristics. 
D)  All of the given answers. 
E)  shall be combined and disclosed in an "all other segments" category and should be combined with other segments that exhibit similar economic characteristics 
A)  should be ignored. 
B)  shall be combined and disclosed in an "all other segments" category. 
C)  should be combined with other segments that exhibit similar economic characteristics. 
D)  All of the given answers. 
E)  shall be combined and disclosed in an "all other segments" category and should be combined with other segments that exhibit similar economic characteristics

Question 4

AASB 8 requires a number of reconciliations to be presented, including:

Accepted Answer

A)  Total segment financial expenses reconciled to total entity financial expenses. 
B)  Total segment revenues reconciled to total entity revenues. 
C)  Total segment assets reconciled to total entity assets. 
D)  Total segment revenues reconciled to total entity revenues and total segment assets reconciled to total entity assets. 
E)  None of the given answers. 
A)  Total segment financial expenses reconciled to total entity financial expenses. 
B)  Total segment revenues reconciled to total entity revenues. 
C)  Total segment assets reconciled to total entity assets. 
D)  Total segment revenues reconciled to total entity revenues and total segment assets reconciled to total entity assets. 
E)  None of the given answers.

Question 5

Examples of segment assets may include:

Accepted Answer

A)  Intangible assets. 
B)  Assets that are the subject of finance leases. 
C)  Deferred income tax assets. 
D)  Intangible assets and assets that are the subject of finance lease. 
E)  All of the given answers. 
A)  Intangible assets. 
B)  Assets that are the subject of finance leases. 
C)  Deferred income tax assets. 
D)  Intangible assets and assets that are the subject of finance lease. 
E)  All of the given answers.

Question 6

An important argument for providing segmental information in the financial reports is:

Accepted Answer

A)  It is simpler and easier for users to follow. 
B)  Consolidated information is so aggregated that it may disguise poor performance and very good performance among segments of the entity. 
C)  The shareholders of the individual companies in the group can use the segment information to assess the performance of their company. 
D)  The segments of the entity will be taxed separately on their earnings. 
E)  None of the given answers. 
A)  It is simpler and easier for users to follow. 
B)  Consolidated information is so aggregated that it may disguise poor performance and very good performance among segments of the entity. 
C)  The shareholders of the individual companies in the group can use the segment information to assess the performance of their company. 
D)  The segments of the entity will be taxed separately on their earnings. 
E)  None of the given answers.

Question 7

The following segment information is presented for Hobbitt LtD.
 
There are no inter-segment sales. Which segments are reportable according to the guidelines provided in AASB 114?

Accepted Answer

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

Question 8

AASB 8 specifies guidelines regarding whether or not a segment is reportable. These guidelines are known as the 10 per cent rules. All three rules are required to be met in order to establish a reportable segment:

Accepted Answer

A) True 
 B)False

Question 9

Consider the following list of operating segments and segment results for the current reporting period relating to Legolas Ltd, and answer the question below.
 
What is the minimum loss (rounded to the nearest $1,000) that the Publishing segment could have made for that segment to be considered a reportable segment according to AASB 8?

Accepted Answer

A)  ($39,000) 
B)  ($114,000) 
C)  ($103,000) 
D)  ($142,000) 
E)  None of the given answers. 
A)  ($39,000) 
B)  ($114,000) 
C)  ($103,000) 
D)  ($142,000) 
E)  None of the given answers.

Question 10

Consider the following list of operating segments and segment assets for the current reporting period relating to Arwen Ltd, and answer the question below.
 
What is the minimum asset amount rounded to the nearest $1,000) that the Fast Food segment should have for that segment to be considered a reportable segment according to AASB 8?

Accepted Answer

A)  $83,000 
B)  $106,000 
C)  $174,000 
D)  $184,000 
E)  None of the given answers. 
A)  $83,000 
B)  $106,000 
C)  $174,000 
D)  $184,000 
E)  None of the given answers.

Question 11

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

Accepted Answer

A)  Segment's reported revenue, including external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments; 
B)  Segment's reported profit or loss is 10 per cent or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss; 
C)  Segment's assets are 10 per cent or more of the combined assets of all operating segments. 
D)  Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements. 
E)  All of the given answers. 
A)  Segment's reported revenue, including external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments; 
B)  Segment's reported profit or loss is 10 per cent or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss; 
C)  Segment's assets are 10 per cent or more of the combined assets of all operating segments. 
D)  Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements. 
E)  All of the given answers.

Question 12

AASB 8 specifies that a geographical segment cannot include more than two countries:

Accepted Answer

A) True 
 B)False

Question 13

Examples of liabilities not considered liabilities of a manufacturing segment by AASB 114 include:

Accepted Answer

A)  Product warranty provisions. 
B)  Accounts payable. 
C)  Customer advances. 
D)  Liabilities relating to finance leases. 
E)  None of the given answers. 
A)  Product warranty provisions. 
B)  Accounts payable. 
C)  Customer advances. 
D)  Liabilities relating to finance leases. 
E)  None of the given answers.

Question 14

AASB 8 requires reconciliation of reported segments' amounts to the entity's reported amount for which of the following items?

Accepted Answer

A)  Dividend income 
B)  Expenses 
C)  Depreciation 
D)  Capital Expenditures 
E)  Liabilities 
A)  Dividend income 
B)  Expenses 
C)  Depreciation 
D)  Capital Expenditures 
E)  Liabilities

Question 15

AASB 8 does not require disclosure of a reportable segment if a segment is mainly transacting with related parties.

Accepted Answer

A) True 
 B)False

Question 16

Segment information may be useful to investors who wish to use ethical guidelines about which industries or countries they invest in:

Accepted Answer

A) True 
 B)False

Question 17

Segment assets are:

Accepted Answer

A)  The net value of assets that are directly employed by a segment in its activities. 
B)  The gross value of assets attributable to the segment plus any share of centrally held assets that contribute to segment activities indirectly. 
C)  The current assets that constitute the working capital of the segment and are used directly in its activities plus any non-current assets specifically held for the purpose identified as the segment's business or geographical activity. 
D)  Those assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can be allocated to that segment on a reasonable basis. 
E)  None of the given answers. 
A)  The net value of assets that are directly employed by a segment in its activities. 
B)  The gross value of assets attributable to the segment plus any share of centrally held assets that contribute to segment activities indirectly. 
C)  The current assets that constitute the working capital of the segment and are used directly in its activities plus any non-current assets specifically held for the purpose identified as the segment's business or geographical activity. 
D)  Those assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can be allocated to that segment on a reasonable basis. 
E)  None of the given answers.

Question 18

Segment revenues as not including:

Accepted Answer

A)  Interest earned on loans to other segments. 
B)  Interest or dividend income, unless the segment's operations are primarily of a financial nature. 
C)  Joint venturer's revenues from its share of joint venture operations. 
D)  Interest earned on loans to other segments and interest or dividend income, unless the segment's operations are primarily of a financial nature. 
E)  All of the given answers. 
A)  Interest earned on loans to other segments. 
B)  Interest or dividend income, unless the segment's operations are primarily of a financial nature. 
C)  Joint venturer's revenues from its share of joint venture operations. 
D)  Interest earned on loans to other segments and interest or dividend income, unless the segment's operations are primarily of a financial nature. 
E)  All of the given answers.

Question 19

AASB 8 bans the disclosure of segments that do not pass the "10 per cent test".

Accepted Answer

A) True 
 B)False

Question 20

Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of AASB 8, or the segments have similar economic characteristics, or the segments are similar in the nature of the products and services.

Accepted Answer

A) True 
 B)False

Exam 25: Segment Reporting

In the situation where an entity has invested in segments that are diverse:

Situations in which aggregated data may be sufficient to evaluate the performance of an entity include:

Information about operating segments that do not meet any of the quantitative thresholds:

AASB 8 requires a number of reconciliations to be presented, including:

Examples of segment assets may include:

An important argument for providing segmental information in the financial reports is:

The following segment information is presented for Hobbitt LtD. There are no inter-segment sales. Which segments are reportable according to the guidelines provided in AASB 114?

AASB 8 specifies guidelines regarding whether or not a segment is reportable. These guidelines are known as the 10 per cent rules. All three rules are required to be met in order to establish a reportable segment:

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

AASB 8 specifies that a geographical segment cannot include more than two countries:

Examples of liabilities not considered liabilities of a manufacturing segment by AASB 114 include:

AASB 8 requires reconciliation of reported segments' amounts to the entity's reported amount for which of the following items?

AASB 8 does not require disclosure of a reportable segment if a segment is mainly transacting with related parties.

Segment information may be useful to investors who wish to use ethical guidelines about which industries or countries they invest in:

Segment assets are:

Segment revenues as not including:

AASB 8 bans the disclosure of segments that do not pass the "10 per cent test".

Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of AASB 8, or the segments have similar economic characteristics, or the segments are similar in the nature of the products and services.

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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