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IFRS 8, titled Operating Segments, is an International Financial Reporting Standard issued by the International Accounting Standards Board (IASB). It replaces IAS 14 and requires entities to report financial and descriptive information about their reportable segments.^[1]

An entity shall 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.^[2] IFRS 8 adopts a management approach, meaning segments are identified based on internal reports regularly reviewed by the entity's Chief Operating Decision Maker (CODM).^[3]

An operating segment is a component of an entity:^[4]

• That engages in business activities from which it may earn revenues and incur expenses.
• Whose operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segment and assess its performance.
• For which discrete financial information is available.

An entity must report separate information about an operating segment if it meets any of the following quantitative thresholds:^[5]

Revenue Test: Reported revenue (including both external sales and intersegment sales) is 10% or more of the combined revenue of all operating segments. > Segment Revenue ≥ 10% × Total Combined Revenue (Internal + External)

Profit or Loss Test: The absolute amount of its reported profit or loss is 10% 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. > Segment Profit/Loss ≥ 10% × MAX(Total Profits of profitable segments ; Total Losses of loss-making segments)

Assets Test: Its assets are 10% or more of the combined assets of all operating segments. > Segment Assets ≥ 10% × Total Combined Assets

After identifying reportable segments based on the 10% thresholds, the entity must ensure that the total external revenue reported by those segments constitutes a sufficient portion of the entity's total revenue.^[6]

Minimum Coverage Formula: > Total External Revenue of Reportable Segments ≥ 75% × Total Consolidated Revenue

If the total external revenue attributable to reportable segments constitutes less than 75% of the entity's revenue, additional operating segments must be identified as reportable segments until at least 75% of the entity's revenue is included.^[7]

Entities are required to disclose a reconciliation of the total of the reportable segments' revenues, profit or loss, assets, and liabilities to the corresponding amounts in the entity's financial statements.^[8]