I) The reason of the importance of MFRS 8 Operating Segments for accounting user
A Framework for decision making
MFRS 8 is important because It specifies how the firm should report their information about its operating segments in the annual financial statements and interim reports and because its sets out the requirements for related disclosures about products and services, geographical area and major customers, therefore the firm can not include any segment in the annual financial statement, any segment reported must have meet specified criteria.
Clear Identification of Financial Benefits
MFRS 8 is important because stakeholders can view the activities of the segments and see how its adds to the development and growth of the firm, since MFRS 8 requires the firm to report the profit or loss of the segments assets and also it requires the firm to quantify the segment liabilities and also to disclose information about countries where its earns revenues and information about the firms major customers, so by disclosing this information stakeholders are able to make informed decisions about the firm
Entity Wide Disclosures
MFRS 8 is important because it facilitates entity wide disclosures because in doing the analysis of a large firm there need to be a breakdown of the segments performance in order to properly evaluate individual operating segments to determine how resources should be allocated to the most effective segments and where to moves resources from the less performing segments to a higher performing segment.
For example of a geographical resource allocation analysis: is if the Brazilian segment of a company is not performing as much as their Singaporean segment, the assets can be transferred to the Singaporean branch in order to facilitate additional improvement
Commercial Sensitivity
MFRS 8 provides rules to prevent/limit the disclosure of