TOPIC: MFRS 8 OPERATING SEGMENT

Question 1

Kokuu Bhd has four separate business segments. The information below is available for
each of the four segments.

Total Operating Identifiable

Revenue Profit Assets
RM`000 RM`000 RM`000
Segments:
Oil and Gas 180,000 45,000 501,000
Automotive 30,000 9,000 249,000
Heavy Machinery 69,000 (6,000) 63,000
Manufacturing 27,000 3,000 57,000
Total 306,000 51,000 870,000

Required:

Identify the reportable segments for Kokuu Bhd assuming the company uses the
profit basis. Show suitable computations to support your answer.

Question 2

Malimar Resources Bhd is engaged in diverse operations consisting of hardware,

furniture, petrol stations and restaurants which are located within Malaysian and
neighboring ASEAN countries. The results of these business segments for the year
ended 31 July 2020 are as follows:

Revenue (RM million)

Business Segment Inter-segment External
Hardware 3 20
Furniture 3 3.9
Petrol station 5 8
Restaurant 5 30

Required:

Identify the reportable segments that meet the requirements of MFRS 8 Operating
Segment based on the 10% threshold. Justify your answer.
Question 3

A. BabyAlike Skin Care Bhd has three operating segments, Cosmetics, Health Foods
and Hygiene. The results for each segment and for the head office for the year
ended 31 December 2019 are as follows:

Cosmetics Health foods Hygiene Head office

RM million RM million RM million RM million
External sales 112.5 125 187.5 -
Inter-segment sales 12.5 32.5 150 -
Segment result (profits) 18 37 147 12
Segment assets 157.5 262.5 325 37.5
Segment liabilities 32.5 57.5 75 7.5

The profit generated by the headquarters is only incidental to the activities of the
company as a whole.

Required:

With reference to MFRS 8, Operating Segments, explain the quantitative threshold

tests that BabyAlike Skin Care Bhd may apply to identify the reportable segments
for year 2019. Use the information given above to illustrate your answer.

Question 4

Analyze which segment qualify as reportable segments using profit/loss

and assets as the basis of 10 threshold tests as allowed by MFRS 8,
Operating Segments