Problem 9: Comprehensive Problem on Operating Segment: In the Super Food Limited example, the information provided to the CODM is based on the same accounting policies as the financial statements (ie. IFRS) with the following exceptions: Segment profit or loss before tax excludes any expenses associated with share-based payments (P990) and other management bonuses (P1,489) Finance costs(P1,627), Finance revenue (785) and income taxes(P3,775) are managed on a group basis and are not allocated to any segment Segment revenue of P902 and the related segment receivable of P2,114 for the publishing segment are recognized on shipment of goods. In the consolidated financial statements, such revenue and receivables are recognized when the goods are delivered to the retailer. Segment assets do not include deferred tax assets managed on a group basis Interest - bearing loans and borrowings, Mandatory redeemable preference shares, income tax payable and deferred tax liabilities are managed on a group basis, and are not allocated to operating segments Super Food Limited Consolidated Profit and Loss Statement For the year ended December 31, 200X Sale of goods Rendering of services Rental income Revenue: Cost of Sales Gross Profit Finance revenue Other income Selling and distribution costs Administrative expenses Other expenses Finance costs Share of profit of associate Profit before tax Income tax expense for the year Profit for the year P 180,293 59,388 16.343 256,024 163.816) 92,208 785 1,585 (14,775) (64,055) (1,088) (1,627) 83 13,116 (3.775) P9.341 Super Food Limited Consolidated Statement of Financial Position December 31, 200X Assets Current assets Cash and cash equivalents Derivative financial instruments Trade and other receivables Inventories 22,628 153 39,873 33.875 96,529 Liabilities and Shareholders' Equity Current liabilities Trade and other payables Interest - bearing loans and borrowings Income tax payable Provisions Other liabilities 17,841 2,460 3,980 599 13.627 38.507 Noncurrent assets Property, plant and equipment Investment properties Intangible assets Investment in associates Available for sale securities Deferred tax assets 33,919 10,893 6,195 764 9,992 383 62,146 Noncurrent liabilities Interest - bearing loans and borrowings Mandatory redeemable preference shares Provisions Employee benefits liability Deferred tax liability 15,078 2,778 5,100 2,544 _3.103 28.603 Shareholders' Equity Share capital Retained earnings 52,375 39,190 91.565 158.675 Total Assets 158,675 Liabilities and Shareholders' Equity The group is organized into eight segments based on their products and services. Management monitors the operating results of the eight business segments for the purpose of making decisions about resources to be allocated and of assessing performance. Also, discrete financial information is available for each business segments. Financial information for the year for the respective segments as provided to the chief operating decision maker is as follows: Assets Revenues Third party Intersegment 129,842 29.694 7,000 29,694 465 2,704 36,791 16,153 16,153 Retail Business direct catering services Domestic direct catering services Manufacturing Cook book publishing Magazine publishing Mail order distribution of bakery products Leasing property Total Profit before tax 6,887 4,000 716 1,283 586 583 Depreciation & amortization 2,609 410 409 206 52.647 22.000 23,145 24,620 7,000 7,165 16,343 16,343 256,926 4,000 761 49,017 1,642 1.642 17,339 11,915 11,914 160,406 92 91 3,817 Decline in FV of investment property Gain on Share of disposal profit of of PPE associate Investment in associate Capital expenditure Liabilities 341 83 764 Retail Business direct catering services Domestic direct catering services Manufacturing Cook book publishing Magazine publishing Mail order distribution of bakery products Leasing of property Total 8,579 604 603 1,842 108 108 14,839 4,891 4,892 3,609 2,352 2,352 306 306 191 532 63 11,907 3,388 3,388 39,711 83 764 Other information: Before proceeding with the 10% thre test, the entity opt to aggregate business segments one operating segment The cook book publishing and magazine publishing businesses have similar economic characteristics and meet all the criteria for aggregation The business direct catering services and domestic direct catering services have similar economic characteristics and meet all the criteria for aggregation Segment performance is evaluated based on segment profit before tax which in certain respects is measured differently from operating profit or loss in the consolidated financial statements Sales between segments are made at prices that approximate market prices. There were no inter-segment profits to be eliminated Capital expenditure consists of additions of property, plant and equipment and intangible assets Geographic information: Philippines France United Kingdom United states Other countries Revenue from external customers 75,123 30,476 38,272 62,349 49,804 Location of non-current assets 21,339 11,544 9,692 6,469 2,727 Revenue from one customer amounted to P27,506 arising from sales by the catering and publishing segments. Required: 1. Identify the reportable segments 2. Prepare the disclosure for the financial information of the operating segments 3. Prepare the disclosure for the reconciliation of financial information provided in operating segment note to information provided in the financial statements 4. Prepare the entity-wide disclosures Problem 9: Comprehensive Problem on Operating Segment: In the Super Food Limited example, the information provided to the CODM is based on the same accounting policies as the financial statements (ie. IFRS) with the following exceptions: Segment profit or loss before tax excludes any expenses associated with share-based payments (P990) and other management bonuses (P1,489) Finance costs(P1,627), Finance revenue (785) and income taxes(P3,775) are managed on a group basis and are not allocated to any segment Segment revenue of P902 and the related segment receivable of P2,114 for the publishing segment are recognized on shipment of goods. In the consolidated financial statements, such revenue and receivables are recognized when the goods are delivered to the retailer. Segment assets do not include deferred tax assets managed on a group basis Interest - bearing loans and borrowings, Mandatory redeemable preference shares, income tax payable and deferred tax liabilities are managed on a group basis, and are not allocated to operating segments Super Food Limited Consolidated Profit and Loss Statement For the year ended December 31, 200X Sale of goods Rendering of services Rental income Revenue: Cost of Sales Gross Profit Finance revenue Other income Selling and distribution costs Administrative expenses Other expenses Finance costs Share of profit of associate Profit before tax Income tax expense for the year Profit for the year P 180,293 59,388 16.343 256,024 163.816) 92,208 785 1,585 (14,775) (64,055) (1,088) (1,627) 83 13,116 (3.775) P9.341 Super Food Limited Consolidated Statement of Financial Position December 31, 200X Assets Current assets Cash and cash equivalents Derivative financial instruments Trade and other receivables Inventories 22,628 153 39,873 33.875 96,529 Liabilities and Shareholders' Equity Current liabilities Trade and other payables Interest - bearing loans and borrowings Income tax payable Provisions Other liabilities 17,841 2,460 3,980 599 13.627 38.507 Noncurrent assets Property, plant and equipment Investment properties Intangible assets Investment in associates Available for sale securities Deferred tax assets 33,919 10,893 6,195 764 9,992 383 62,146 Noncurrent liabilities Interest - bearing loans and borrowings Mandatory redeemable preference shares Provisions Employee benefits liability Deferred tax liability 15,078 2,778 5,100 2,544 _3.103 28.603 Shareholders' Equity Share capital Retained earnings 52,375 39,190 91.565 158.675 Total Assets 158,675 Liabilities and Shareholders' Equity The group is organized into eight segments based on their products and services. Management monitors the operating results of the eight business segments for the purpose of making decisions about resources to be allocated and of assessing performance. Also, discrete financial information is available for each business segments. Financial information for the year for the respective segments as provided to the chief operating decision maker is as follows: Assets Revenues Third party Intersegment 129,842 29.694 7,000 29,694 465 2,704 36,791 16,153 16,153 Retail Business direct catering services Domestic direct catering services Manufacturing Cook book publishing Magazine publishing Mail order distribution of bakery products Leasing property Total Profit before tax 6,887 4,000 716 1,283 586 583 Depreciation & amortization 2,609 410 409 206 52.647 22.000 23,145 24,620 7,000 7,165 16,343 16,343 256,926 4,000 761 49,017 1,642 1.642 17,339 11,915 11,914 160,406 92 91 3,817 Decline in FV of investment property Gain on Share of disposal profit of of PPE associate Investment in associate Capital expenditure Liabilities 341 83 764 Retail Business direct catering services Domestic direct catering services Manufacturing Cook book publishing Magazine publishing Mail order distribution of bakery products Leasing of property Total 8,579 604 603 1,842 108 108 14,839 4,891 4,892 3,609 2,352 2,352 306 306 191 532 63 11,907 3,388 3,388 39,711 83 764 Other information: Before proceeding with the 10% thre test, the entity opt to aggregate business segments one operating segment The cook book publishing and magazine publishing businesses have similar economic characteristics and meet all the criteria for aggregation The business direct catering services and domestic direct catering services have similar economic characteristics and meet all the criteria for aggregation Segment performance is evaluated based on segment profit before tax which in certain respects is measured differently from operating profit or loss in the consolidated financial statements Sales between segments are made at prices that approximate market prices. There were no inter-segment profits to be eliminated Capital expenditure consists of additions of property, plant and equipment and intangible assets Geographic information: Philippines France United Kingdom United states Other countries Revenue from external customers 75,123 30,476 38,272 62,349 49,804 Location of non-current assets 21,339 11,544 9,692 6,469 2,727 Revenue from one customer amounted to P27,506 arising from sales by the catering and publishing segments. Required: 1. Identify the reportable segments 2. Prepare the disclosure for the financial information of the operating segments 3. Prepare the disclosure for the reconciliation of financial information provided in operating segment note to information provided in the financial statements 4. Prepare the entity-wide disclosures