An operating segment is defined by AASB 8 as:
A) a component of an entity that is of separable and identifiable interest to a section of stakeholders of the entity.
B) a distinguishable component of an entity and that component is engaged in providing an individual product or service or group of related products or services and is subject to risks and returns that are different from those of other distinguishable components of the entity.
C) an identifiable component of an entity that is engaged in providing an individual product or service to other entities within the group and is subject to special risks and returns as a result of relying on other components of the entity.
D) an identifiable component of an entity based on functional relationships with suppliers or customers or financiers established over a period of time.

Question

Quizplus · Accepted Answer

According to AASB 8, an operating segment is a distinguishable component of an entity that provides an individual product or service or group of related products or services and is subject to risks and returns that are different from other distinguishable components of the entity. This definition emphasizes the need for an operating segment to be distinguishable, provide a unique product or service, and have unique risks and returns compared to the rest of the entity. Choice A is partly correct but does not emphasize the need for the component to be distinguishable. Choice C is incorrect because it refers to transactions within a group rather than a component of the entity. Choice D is incorrect because it refers to functional relationships rather than a component providing a unique product or service.

An Operating Segment Is Defined by AASB 8 As