AASB 8 requires that ‘an entity shall disclosure 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’. [Para. 1]
It consists of both a general theory part and an application part that involves researching on the disclosure practice of real-world Australian listed companies.
Part 1: GENERAL
- a) In what ways can segment reporting (AASB 8) be seen as the opposite of consolidation
accounting (AASB 10)? Do you think it is paradoxical to require both segment reporting and consolidation accounts in the same financial report?
Part 2: APPLICATION – Highlands Pacific Limited(HIG)
- a) For HIG, describe the principal activities it engages in and of its various
business components by referring to the ‘management discussion and analysis’
section(s) of the annual report.
- b) Critically evaluate the segment information disclosed in the annual report to ascertain
if the disclosure practice of the company complies with the requirements of AASB 8 as
regards the definition of ‘operating segments’ and ‘reportable segments’. [Hint: You
may wish to verify the reportable segments disclosed by referring to the various
quantitative thresholds adopted in AASB 8.]
- c) For each disclosed financial item, does the total of all the reportable segments equal to
the corresponding consolidated figures for the whole group? What explains the
differences between these two sets of numbers?