IFRS 8 Segment Reporting: Understanding the Practical Limit for Disclosures

IFRS 8 notes that there may be a practical limit to the number of reportable segments that an entity separately discloses beyond which segment information may become too detailed. IFRS 8 suggests that if the number of segments that are reportable increases above ten, then ____________ Select the words that correctly complete the above statement. A. The entity may provide less detailed disclosures regarding each reportable segment. B. The entity must aggregate operating segments to get to a maximum of ten. C. The entity should consider whether a practical limit has been reached.

C. The entity should consider whether a practical limit has been reached.

According to IFRS 8, if the number of reportable segments increases above ten, the entity should consider whether a practical limit has been reached, and it may need to aggregate operating segments in order to maintain the relevance and usefulness of the disclosed segment information without making it excessively detailed. However, it does not mandate a strict limit of ten segments; rather, it suggests that when the number exceeds ten, the entity should assess whether the additional detail becomes too complex or cumbersome for users of the financial statements. If so, the entity may choose to aggregate or combine certain segments to present more meaningful information.

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