ACCT 3563 Individual Report: Segment Reporting Comparison Analysis

This report provides a comparative analysis of segment reporting practices between two companies, one from Australia (Atlas Pearls) and one from Hong Kong (High Fashion International Limited). The analysis focuses on the requirements of IFRS 8, AASB 8, and HKFRS 8, which govern segment reporting. The report examines the operating and reportable segments of each company, the nature of the segments reported, and the differences in segment reporting disclosures. It explores how legal, regulatory, and cultural differences between Australia and Hong Kong might influence segment reporting practices, including the use of different accounting standards and the approach to consolidation. The report also investigates specific differences in financial reporting, such as legal claims, debt financing, and the role of the board of directors, highlighting how these aspects impact the segment reporting process. The findings offer insights into the application and interpretation of segment reporting standards in different geographical and regulatory contexts.

Running head: SEGMENT REPORTING
SEGMENT REPORTING
Name of the Student
Name of the University
Author Note

1SEGMENT REPORTING
Table of Contents
Question a...................................................................................................................................2
Question b..................................................................................................................................3
Question c...................................................................................................................................5
Question d..................................................................................................................................5
References..................................................................................................................................7

2SEGMENT REPORTING
Question a
The segments in a business can be divided into two parts and these are known as
business segment and geographical segment. According the accounting standards, a business
entity requires to report the segments. The annual report of the business organizations show
these segments separately (Bugeja, Czernkowski & Moran, 2015). However, there are
differences between operating segment and reportable segment in AASB8 and HKFRS8.
These differences can be summed as-
Operating Segment
The operating segment of a business entity has been termed as that segment of the
entity which is indulged with other segments of that same entity. The responsibility of the
operations manager is to supervise the financial outcomes of the operating segment (Farías &
Rodríguez, (2015).
Reportable Segment
The reportable segments fall under the category of operating segments but these
segments are reported separately by the entity. There are prescribed threshold as per the
AASB8 and HKFRS8 and the operating segments which fall under this threshold are
considered reportable (Lessambo, 2018).
The business entities normally classify their business based on the segments. The
purpose of doing this is to have a clear understanding about the nature of the component of
the enterprise. Since, there are certain components of the business which are classified as
geographically, whereas, other components are classified under the nature of the product and

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services. Therefore, the management is able to make a comparison of the companies which
are operating in similar types of segments (Bugeja, Czernkowski & Moran, 2015).
Question b
The number and nature of operating segment reported
Both the companies have two operating segment report one is the segmentation of the
revenue and the other is the geographical segmentation.
The consolidation of the segment reporting is required to reflect the financial situation
and performance of the operating activity of the organisations
High fashion industries limited used to reconcile the columns like sales within the
segment and purchase made within the organisations (Fatmawati & Pratiwi 2018)..
Atlas pearls on the other hand as an Australian company does not follow IFRS and
make overall reconciliation of the income statement and the balance sheet and not on segment
basis (Brown Jorgensen & Pope 2019)..
High fashion industries limited used to disclose the following on segment to segment basis
 Revenue from exterior clients
 Revenue from businesses with the different operational segments
 Interest expenses
 Depreciation and amortisation
 Object’s attention in profit and loss
 Material items of income and expenses
Atlas pearls made segment to segment reporting on the following

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 Revenue from businesses with other operational segments
 Interest expenses
 Depreciation and amortisation
Identification of the geographical location of both the companies other than their main
operating area
Geographical network of high fashion limited
Apart from its original business in 22/F CITIC telecom tower 93 kwai kwai chung , new
territories Hong Kong the company also engaged in the operations in the following other
countries
 Canada
 United states of America
 The PRC
 Other European countries
From USA the company generated revenue of HK $1061319, from Europe it earned
HK$ 475194 and from other European countries it earned HK$318884.
Apart from its headqarter in the 47-49 bay view terrace Claremont region of western australia
Australia the Atlas pearl limited has also operational units in other countries also some of
these are
o Japan
o Bali
o Philippines
o Papua ne genie
o Indonesia and

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In many other European countries.
The organisation earned 9676640 from japan and from other countries its generate
revenue of $763888.
Question c
The segment reporting in Australia is required by those entities whose equity
instruments or liability are operated in the open market and Atlas Pearls is one of the
instances. During the year 2006, the IASB issued Operating Segments under IFRS 8. It is a
conjunction standard with FAS 131. According to IFRS 8 the operating segment has been
recognized on the base of the interior reports and those interior reports are viewed frequently
by the chief functioning pronouncement maker. The persistence of segment reporting under
IFRS 8 is to showcase the segment of the entity through the views of the management
(Pwc.com., 2020).
Similarly the segment reporting in Hong Kong is required by those entities whose
equity instruments or obligation are operated in the open market and Hong Kong Corporation
High Fashion Intl Ltd is one of the instances. During the year 2006, the IASB issued
Operating Segments under IFRS 8. It is a conjunction standard with FAS 131. The chief
operating decision maker is in charge of segment reporting in directive to assign the funds in
the segment and measure the presentation of the business entity and it is recognized on the
foundation of the interior reports and those internal reports. Moreover, there have been
amendments for measurement and disclosure requirement also and the persistence of segment
reporting under IFRS 8 is to showcase the segment of the unit through the views of the
management and there is no differences between HKFRS 8 and IFRS 8 (Pwc.com., 2020).

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Question d
The two differences that can be associated with differences is the accounting
standards that are used by the companies.beside that the differnces also occurs due to the
legal regulatort and the cultural aspects also. The Australian company used to implement the
accounting standards provided by the AASB and all the disclosures are also made in the same
manner as prescribed by the provision of the guidelines and principles delivered by the
AASB whereas the Hong-Kong based company used to follow the HKFRS in preparing the
financial reports but both the companies can be associated with the fact that both companies
has followed IFRS at least at some part of the financial statements and the segmentation
reporting.
Alter pearl limited has made special provison for their legal claims service warranties
against the occurrence of past events. From the annual report of the company it has been
observed that there is no legal claims lodged against the joint ventures in which the company
collaborate.
High fashion limited has a legal obligation with regard to the interest in a joint
venture with Longford information technology with an amount of HK$1597000. This amount
is specified in the segment reporting section.
Cultural intelligence and sustainability have been at the forefront of the growth of
atlas pearls since its formation.
High fashion has made an investment of US $ 2000000 in the cultural complex
development through its subsidiary Zhejiang high fashion culture creative.
The control process of both the companies different from each other the board of
directors of high fashion industries limited play active role in controlling the affairs of the
company and also look after the segment reporting process where as in the Australian

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company that is the atlas pearl the CEO and the finance executives control the reporting
process (Kopecká 2016).
Both the companies used debt finance to meet their financial obligation but in case of
the high fashion limited the interest on borrowings have increased in the year 2018 in
comparison to 2017.as per the segment report provided by this hong kong based company the
total loan amount is HK$770459. The borrowing cost of the atlas pearls decreased in the year
2019 in comparison to the borrowing cost of 2018. As on 30th june 2019 the Australian
company has a bank overdraft loan facility with the NAB with a limit of $1.50 million. This
indicates that the Australian company is less risky in comparison to the Hong-Kong based
company (Gisbert 2019).
References
Brown, R. J., Jorgensen, B. N., & Pope, P. F. (2019). The interplay between mandatory
country-by-country reporting, geographic segment reporting, and tax havens:

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Evidence from the European Union. Journal of Accounting and Public Policy, 38(2),
106-129.
Bugeja, M., Czernkowski, R., & Moran, D. (2015). The impact of the management approach
on segment reporting. Journal of Business Finance & Accounting, 42(3-4), 310-366.
Farías, P., & Rodríguez, R. (2015). Segment disclosures under IFRS 8’s management
approach: has segment reporting improved?. Spanish Journal of Finance and
Accounting/Revista Espanola de Financiacion y Contabilidad, 44(2), 117-133.
Fatmawati, D. S. A., & Pratiwi, A. D. (2018). Segment Reporting: The Beginning of
Transition Period in Indonesia. Review of Integrative Business and Economics
Research, 7, 190-201.
Gisbert, A. (2019). FROM IAS 14 TO IFRS 8: ARE PROPRIETARY COSTS EFFECTIVELY
AFFECTING FINANCIAL REPORTING? (Doctoral dissertation, Universidad
Autónoma de Madrid).
Kopecká, N. (2016). The IFRS 8 segment reporting disclosure: Evidence on the Czech listed
companies. European Financial and Accounting Journal, 11(2), 5-20.
Lessambo, F. I. (2018). Segment and Intermediary Financial Statements. In Financial
Statements (pp. 277-297). Palgrave Macmillan, Cham.
Pwc.com. (2020). Retrieved 5 April 2020, from https://www.pwc.com/gx/en/asset-
management/assets/ifrs-gaap-2009.pdf