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New Zealand International Financial Reporting Standard

1122 words - 5 pages

New Zealand International Financial Reporting Standard 8 (NZ IFRS 8) Operating Segments replaced New Zealand International Accounting Standard 14 (NZ IAS 14) Segments Reporting. Since 2009 NZ IFRS 8 has been compulsory. This essay will be covering the definition of an Operating Segment and the major changes that have occurred. It will also include summary of number and type of operating segments of the five listed companies in Part A and discussion on whether information provided under NZ IFRS 8 is of greater quality and useful for decision makers.
An operating segment as defined in NZ IFRS 8 “is a component of an entity that engages in business activities from which it may earn revenues ...view middle of the document...

(NZICA, 2013). NZ IFRS 8 no longer identifies secondary and primary segments. NZ IFRS 8 has adopted the “management reporting approach” to identify operating segments. (Ernest & Young, n.d). Management approach has made communication between management and investor’s easier and incremental costs of the implementation of IFRS 8 were low. (IASB, 2013)
According to NZ IFRS 8 various financial disclosures are required for each reportable segment. The entities are required to report interest revenue separately from interest expense unless majority segment revenues are from interest. An entity or entity with a single reportable segment is required to disclose information about its products and services, geographical areas and major customers as a whole. However, the specified amount is to be disclosed and explanation of how profit and loss, segment assets and segment liabilities are measured has to be disclosed in the notes to a reporting entity’s financial statements to the extent that segments are deemed to be reportable according to NZ IFRS 8. Entity receiving ten percent of its revenue from a single customer are required to disclose the amount and the name of the operating segment. (Ernest & Young, n.d)
Auckland International Airport Limited has three operating segments. These three industry segments are aeronautical, retail and property. Infratil Limited has six operating segments. These group’s industry segments are TrustPower, Wellington Airport, NZ Bus, Infratil Energy Australia, Infratil Airports Europe and Other. Infratil operating Segment is based on group’s industry and three geographic segments in New Zealand, Australia, and United Kingdom. Michael Hill International Limited operates in four geographic segments that are New Zealand, Australia, Canada and United States of America. Ports of Tauranga Limited operates in three reportable industry segments that are Property Services, Port Operations, and Transport Services operating in one geographical area, New Zealand. Restaurant Brands Limited group has four operating segments that are KFC, Pizza Hut, Starbucks Coffee and Carl’s Jr.
Information provided under NZ IFRS 8 is of greater quality and more useful for the users of financial statements. The quality of information is based on qualitative characteristic of the framework. IFRS framework addresses the qualitative characteristics of useful financial information which determines the types of information useful for users in making decision based on the financial reports of the reporting entity. Relevance and faithful representation are two essential qualitative characteristics of useful financial information. The financial information is useful only...

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