ACCA DipIFR question papers and answers on IFRS 8 from June 2014


All questions on IFRS 8 Operating Segments which have appeared in ACCA DipIFR from June 2014 have been indexed here. The answers are based on the standards prevalent at the exam point in time.

For the benefit of the readers, we have put the following sequentially to help them understand better

  • Question - Relevant portion of the exam pertaining to the standard has been recreated
  • Answer - Answers as shared by the ACCA Examination team which was required for the question
  • Examiners Feedback - Feedback on answers given by the students for that exam, this is a critical part of learning as students can learn from mistakes which other students did

ACCA Past question papers December 2014


You are the financial controller of Omega, a listed entity which prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). The managing director, who is not an
accountant, has recently been appointed. She formerly worked for Rival, one of Omega’s key competitors. She has reviewed the financial statements of Omega for the year ended 30 September 2014 and has prepared a series of
queries relating to those statements:

‘I was very confused by the note that included financial information relating to our operating segments. This note bears very little resemblance to the equivalent note included in the financial statements of Rival. Please explain how the two notes can be so different.’. 


It is true that the there is an International Financial Reporting Standard (IFRS) which deals with operating segments and lays down the content of segmental reports (concept). The relevant standard is IFRS 8 – Operating Segments. 
However, differences between the segment reports of organisations will arise from how segments are identified and what exactly is reported for each segment. 
IFRS 8 defines an operating segment as a component of an entity which engages in revenue earning activities and whose results are regularly reviewed by the chief operating decision maker (CODM). 

The CODM is the individual, or group of individuals, who makes decisions about segment performance and resource allocation. This definition means that the operating segments of apparently similar organisations could be identified very differently, with a consequential impact on the nature of the report. 

As stated above, differences also arise due to the reporting requirements for each segment. IFRS 8 requires that ‘a measure’ of profit or loss is reported for each segment. However, the measurement of revenues and expenses which are used in determining profit or loss is based on the principles used in the information the CODM sees. This is so, even if these principles do not correspond with IFRS.
This could clearly cause differences between reports from apparently similar organisations. 

Additionally, IFRS 8 requires a measure of total assets and liabilities by operating segment if the CODM sees this information. Since some CODMs may see this information and some may not, this could once again cause differences between the reports of apparently similar organisations.

Examiners Feedback

Candidates did not answer part (a) very well. A significant number of candidates were unaware of any of the requirements of the international financial reporting standard on segment reporting – IFRS 8. Many such candidates made reference to IAS 14 – the predecessor standard to IFRS 8. It has already been stated in this
report that candidates need to keep their knowledge up to date and it appears that further attention is required to new standards. Another factor in part (a) was that many candidates did not address the requirements of the question specifically enough. The question asked why the segment reports of two apparently similar entities could be so different. A number of candidates did not really attempt to address this issue, but simply defined the meaning of an operating segment and (in some cases at least) the relevant requirements of IFRS 8.

ACCA Past question papers December 2016


You are the financial controller of Omega, a listed entity which prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). You have recently produced the final draft of the financial statements for the year ended 30 September 2016 and these are due to be published shortly. The managing director, who is not an accountant, reviewed these financial statements and prepared a list of queries arising out of the review.

On reviewing our financial statements, I found a note giving information about the different segments of our business and also the disclosure of the earnings per share of our entity. Neither the segment note nor the earnings per share disclosure appears in the financial statements of entity X . Even though entity X is unlisted, both entities report under full International Financial Reporting Standards so I do not understand how this difference can occur. Please explain this to me.

One of the notes to the financial statements gives details of purchases made by Omega from entity X during the period. I own 100% of the shares in entity X but I do not understand why it is necessary for any disclosure whatsoever to be
made in the Omega financial statements. The transaction is carried out on normal commercial terms and is totally insignificant to Omega, representing less than 1% of Omega’s purchases. 


Where two companies report under the same reporting framework, you would generally expect the same reporting requirements to apply to both companies. However, there are certain requirements of IFRS which apply to listed companies only.  The requirement to provide segmental information and to disclose earnings per share are both examples of requirements which only listed companies are forced to comply with. 

If an unlisted entity voluntarily chooses to provide segmental information, or to disclose its earnings per share, then it must comply with the provisions of the relevant IFRS in both cases.

Examiners Feedback

Answers to part required students to explain the difference between listed and unlisted entities reporting under full International Financial Reporting Standards. Whilst some candidates scored good marks here, others wasted time by referring to the IFRS for SMEs – the question made it clear that entity X reported under full IFRS. Other candidates referred specifically to the reporting requirements of IFRS 8 – Operating Segments, and IAS 33 – Earnings per Share. Even where such references were accurate, no marks could be awarded since this was not what the question was asking.

ACCA Past question papers June 2018


You are the financial controller of Omega, a listed entity which prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). The chief executive officer (CEO) of Omega has reviewed the draft consolidated financial statements of the Omega group and of a number of the key subsidiary companies for the year ended 31 March 2018. None of the subsidiaries are listed entities but all prepare their financial statements in
accordance with IFRS. The CEO has sent you an email with the following queries:

I notice that the disclosures relating to operating segments in the consolidated financial statements appear to be based on the geographical location of the customers of the group. I am the non-executive director of another large listed
entity and the segment disclosures in their consolidated financial statements are based on the type of products sold. Also some of our larger subsidiaries have customers located in more than one geographical region, yet they provide no segment disclosures whatsoever in their individual financial statements. I would like to see segment disclosures given in the individual subsidiary accounts as well. I really don’t understand these inconsistencies given that all these financial statements have been prepared using IFRS. Please explain the reasons for these apparent inconsistencies.



Principle: The relevant IFRS which deals with operating segments is IFRS 8 – Operating Segments. The definition of an operating segment in IFRS 8 is based around an entity’s business model, which could be different from entity to entity and the disclosures focus on the information which management believes is important when running the business. 

Detailed definition:  IFRS 8 defines an operating segment as a component of an entity:
– Which engages in business activities from which it may earn revenues and incur expenses, and
– Whose operating results are regularly reviewed by the chief operating decision maker, and 
– For which discrete financial information is available. 

The ‘chief operating decision maker’ is a role rather than a title or it is a function and not necessarily a person. The role/function is defined around who monitors performance and allocates resources of the operating segments. 

IFRS 8 is only compulsory for listed entities. If we wanted to include information regarding the operating segments of individual subsidiaries, then we could as IFRS 8 requires judgement in its application. However, the information in the individual financial statements would either need to comply with IFRS 8 in all respects or the information cannot be described as ‘segment information’.

Examiners Feedback

In answers to question 1, a minority of candidates did not seem to be aware that International Accounting Standard (IAS®)14 had been replaced by IFRS8, and answered the question using the old financial reporting standard.


ACCA Past question papers Sep 2020


Omega is a listed entity and you are the financial controller. The financial statements of Omega for the year ended 31 March 20X5 are currently being prepared. One of Omega’s directors has sent you three questions regarding the financial statements.I know that, because we’re a listed entity, we are required to disclose details of the financial performance and financial position of different business segments in the notes to our financial statements. I thought it would be interesting to compare the segment report in our financial statements with that of a key competitor. When I did this, I found myself very confused. Our segment report was based on the performance and position by geographical area whereas our competitor’s report was based on the performance and position by product type.

How can this be correct when both of us are preparing our financial statements in accordance with International Financial Reporting Standards (IFRS® Standards) – is there not a definition of a ‘segment’ that would be applied to all businesses?

Provide answers to the questions raised by one of Omega’s directors relating to the financial statements for the year ended 31 March 20X5.



IFRS 8 – Operating Segments – requires entities to which it applies to provide a segment report based on its operating segments.

An operating segment is a business component for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker (exact words not needed).

The chief operating decision maker is the person (or persons) who assesses performance and allocates resources (exact words not needed).

Omega assesses performance and allocates resources on a geographical basis whereas our competitor more than likely does this on a ‘product type’ basis (mark for coming to a logical conclusion).

Notwithstanding the above, IFRS 8 normally requires all entities to give details of revenues by geographical area and by product type and non-current assets by geographical area.

However, the above is not required if the information could only be made available at a prohibitive cost. This may explain the discrepancy between the segment reports.

Examiners Feedback

Some candidates spent too much time in focussing on the definition of an operating segment. There were 3 marks available for this but in some cases candidates did not move on to discuss the implications for the segmental disclosures that are required and the reason they could differ from entity to entity. Very few candidates discussed the fact that certain geographical disclosures are always required unless the cost to provide them would be ‘prohibitive’. A number of candidates unnecessarily stated that Omega, being a listed entity, would be required to provide segmental disclosures. This is correct, but it was stated in the question.

ACCA Past question papers Dec 21


You are the financial controller of Omega, a listed entity with a number of subsidiaries. Your managing director has recently returned from a seminar which discussed a wide range of business issues. Some of these issues related to the preparation of the financial statements. The managing director has prepared a list of questions for you which have arisen as a result of her attendance at the seminar.

The  seminar  referred  to  the  need  for  companies  to  provide  information  about  the  financial performance  and  financial  position  of   different  segments  of   their  business  in  a  note  to  their  financial statements. They provided an example of  the disclosures provided by a listed entity of  a similar size to Omega. On returning from the seminar, I compared the segmental disclosures we  had  been  shown  with the  segmental  disclosures  which  Omega  makes.  The  way  Omega  identifies and discloses segmental information was totally different from the seminar example.

How can this be right – I thought financial statements needed to be prepared on a consistent  basis?

 I  also  looked  at  the  financial  statements  of   one  of   our  key  competitors.  This  competitor  is  an  unlisted family run business which has grown very rapidly and is now not much smaller in size than the Omega group. They operate in the same economic sectors as we do. However, their financial  statements  make  no  segmental  disclosures.  Please  explain  how  not  applying  the  segmental reporting requirements is acceptable when this company is preparing the financial

statements using IFRS Standards.



The issue of segmental disclosures is addressed in IFRS 8 – Operating Segments. IFRS 8 requires that segmental disclosures are made with reference to key operating segments of the business.

IFRS 8 says that an operating segment is one which earns revenues and incurs expenses, whose results are regularly reviewed by the chief operating decision maker and for which discrete financial information is available.

The term ‘chief operating decision maker’ is a role, not a manager with a specific title. The function is to assess performance and allocate resources. This role is often undertaken by the chief executive officer but there could be circumstances where the role is undertaken by a group of directors.

The segments which are reported are identified because:

  1. (i)  They exceed quantitative thresholds set out in IFRS 8; and

  2. (ii)  It will allow users of the financial statements to evaluate the nature of the business activities and the economic environment in which it operates (nature of the products, the production processes, type of customer, distribution methods, regulatory environment).

Given that different entities could organise themselves in different ways, the operating segments which are identified and reported could theoretically differ between apparently similar entities.

IFRS 8 only applies to listed entities, so a large unlisted family business would not be required to given segmental disclosures.

Examiners Feedback

In issue three the majority of candidates were able to gain some marks by stating that the segment reports required by IFRS 8 – Operating Segments – depend on the internal reporting structures of the reporting entity. A number followed through by describing the identification and the role of the Chief Operating Decision Maker in this process. However many candidates failed to appreciate that the reason Omega is required to publish a segment report, whilst its key competitor is not, is because Omega is listed whereas its key competitor is not. Protracted references to the IFRS for SMEs were not relevant here – as already stated they key driver for the production of segment reports is whether or not the reporting entity is listed. The issue of whether or not the competitor uses the IFRS for SMEs is not central to this distinction. The IFRS for SMEs was relevant in question four from the June 2021 paper and once again it would appear that some candidates are placing over reliance on the content of previous examinations when presenting their answers.

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