IAS 14 (International Accounting Standard 14) sets out the guidelines for reporting financial information on a company’s operating segments, as well as its products and services, geographic areas, and major customers.
The purpose of segment reporting is to provide information to users of financial statements that allows them to evaluate the nature and financial effects of the business activities of a company’s various segments.
Here are some examples of how segment reporting might be used:
- A company that operates in multiple geographic regions might provide segment information on revenue and expenses for each region, allowing investors to see how the company’s performance varies by location.
- A company that sells multiple products or services might provide segment information on revenue and expenses for each product or service line, allowing investors to see how the company’s performance varies by product or service.
- A company that operates in multiple business segments might provide segment information on revenue and expenses for each segment, allowing investors to see how the company’s performance varies by segment.
- A company that has a few major customers might provide segment information on revenue and expenses for each major customer, allowing investors to see how the company’s performance is impacted by each customer.
Overall, segment reporting provides valuable information to investors and stakeholders about a company’s performance and helps them make more informed decisions.