FRS 14 prescribes the reporting of financial information by segment – information.
FRS 14 applies to enterprises whose equity or debt securities are publicly traded and enterprises in the process of issuing equity or debt securities in public securities market. Enterprises not in the above categories are also encouraged to disclose financial information by segment voluntarily.
A business segment is a component of an enterprise that is engaged in providing an individual or a group of product or service and is subject to risks and returns that are different from other business segments.
A geographical segment is a component of an enterprise that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those in other economic environments.
The source and nature of an enterprise’s risks and returns determine whether the primary segment reporting will be business segments or geographical segments. Enterprises risks and returns mainly affected by differences in products and services should have its primary segment reporting as business segments and secondary segment reporting as geographical segments.
Likewise, enterprises risks and returns mainly affected by its operations in different countries should have its primary segment reporting as geographical segments and secondary segments as business segments. This is identified by the enterprise’s internal organizational and management structure and its system of internal financial reporting to senior management.
A business or geographical segment is a reportable segment if a majority of its revenue is earned from sales to external customers; and
a) these revenue from sales to external customers is 10% or more of the total revenue of all segments; or
b) its profit or loss results is 10% or more of the combined result of all segments in profit or loss, whichever is the greater in absolute amount; or
c) its assets are 10% or more of the total assets of all segments.
If total external revenue due to reportable segments is less than 75% of the total consolidated revenue, additional segments are identified as reportable segments until at least 75% of total revenue is included in reportable segments.
The disclosure for each primary reportable segment is as follows:-
a) separate revenue disclosure of sales to external customers, inter-segment revenue;
b) separate results from both the continuing and discontinuing operations;
c) carrying amount of segment assets;
d) segment liabilities; and
e) cost incurred in the period to acquire property, plant and equipment and intangibles.
The disclosure for each secondary reportable segment is as follows:-
a) separate revenue disclosure of sales to external customers and inter-segment;
b) carrying amount of segment assets; and
c) cost incurred in the period to acquire property, plant and equipment and intangibles.
Source – ICPAS CPA Singapore Wire 28 May 2009