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AASB 8 - Operating Segments
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Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

 
Segment reporting and impairment 
as reported in ANT45/2008 
 
Q: I have heard that even if I have early adopted AASB 8 Operating Segments to avoid making segment disclosures, the content of that standard may still have an impact on my financial report. How can this be? 
 
A: The revised segment reporting standard AASB 8 impacts the level at which impairment tests must be carried out in accordance with AASB 136 Impairment of Assets, regardless of whether the entity has to apply AASB 8. 
 
When AASB 8 was issued, a consequential amendment to AASB 136 clarified that each cash generating unit or group of cash generating units to which goodwill is allocated should not be larger than an operating segment determined in accordance with AASB 8. These cash generating units also form the basis for impairment testing for the goodwill. This applies whether or not an entity is required to disclose segment information in accordance with AASB 8. 
 
Although AASB 8 is not applicable until 1 January 2009, many entities have adopted AASB 8 early – frequently to avoid having to make the segment disclosures. These entities are also required to adopt the AASB 136 amendment early. 
 
The next question that arises is whether the level of the impairment test should be the operating segment level or reportable segment level (being an amalgamation of segments permitted for disclosure purposes by AASB 8). 
 
As part of the IASB’s annual improvements project, ED 165 proposes clarifying AASB 136 so that the largest unit permitted for the goodwill impairment test required by AASB 136 is the lowest level of operating segment defined by AASB 8 before any aggregation that is permitted by the standard. 
 
The impact of these changes is that all entities will need to reconsider how their existing operating segments and cash generating units align in order to effectively assess the impact of the adoption of AASB 8. 
 
 
AASB 8 
as reported in ANT14/2007 
 
Q: Given that AASB 8 only applies to for-profit entities or groups,
(i) whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or  
(ii) that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market;
does that mean that other entities that have been up until now caught by AASB 114 can decide to adopt AASB 8 early and then not do any segment reporting at all? 
 
A: We understand that the AASB considered the changed scope of this standard when they decided to align AASB 8 with IFRS 8. This means that entities not caught under the new scope, ie all other reporting entities, can therefore apply AASB 8 early and cease segment reporting if they wish.