ASBE No. 35
Active
Segment Reporting
Segment Reporting is part of the Chinese Accounting Standards for Business Enterprises (ASBE).
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Conceptual Framework Linkage
Reporting through the eyes of management
ASBE No. 35 governs the IDENTIFICATION and DISCLOSURE of OPERATING SEGMENTS – COMPONENTS of an ENTERPRISE that ENGAGE in BUSINESS activities from WHICH it MAY earn REVENUES and INCUR expenses, and WHOSE operating RESULTS are REGULARLY reviewed by the ENTITY'S chief OPERATING decision MAKER. THE Standard APPLIES the SAME "MANAGEMENT approach" as IFRS 8 internationally.
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Scope
Listed companies with distinguishable business components
This Standard applies to LISTED companies (and OTHERS choosing to DISCLOSE segment INFORMATION), REQUIRING disclosure of INFORMATION enabling USERS to EVALUATE the NATURE and financial EFFECTS of the BUSINESS activities the ENTERPRISE engages IN, and the ECONOMIC environments it OPERATES within.
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Identifying Operating Segments – the Management Approach
Based on internal reporting structure, not externally imposed categories
OPERATING segments are IDENTIFIED based on the ENTERPRISE'S OWN INTERNAL organisational and REPORTING structure – HOW management ITSELF views and MANAGES the BUSINESS INTERNALLY – RATHER than an EXTERNALLY imposed INDUSTRY or GEOGRAPHIC classification SCHEME.
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The Chief Operating Decision Maker
The function allocating resources and assessing performance
The "CHIEF OPERATING DECISION MAKER" is a FUNCTION (NOT necessarily a SINGLE individual) RESPONSIBLE for ALLOCATING resources TO, and ASSESSING the PERFORMANCE of, an ENTERPRISE'S operating SEGMENTS – the INFORMATION THIS function REGULARLY reviews FORMS the BASIS for IDENTIFYING segments.
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Quantitative Thresholds for Reportable Segments
Any single 10% test qualifies a segment for separate reporting
AN operating SEGMENT is a REPORTABLE segment WHERE its REVENUE, PROFIT or LOSS, or ASSETS represent 10% OR more of the COMBINED totals for ALL operating SEGMENTS – MEETING ANY ONE of these THREE tests QUALIFIES a segment for SEPARATE disclosure.
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Aggregation of Similar Segments
Combining segments with similar economic characteristics
TWO or MORE operating SEGMENTS with SIMILAR economic CHARACTERISTICS (SIMILAR products, PRODUCTION processes, CUSTOMER types, and REGULATORY environments) MAY be AGGREGATED into a SINGLE reportable SEGMENT, WHERE aggregation is CONSISTENT with this Standard'S core PRINCIPLES.
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Reconciliations to Consolidated Totals
Bridging segment totals to the consolidated financial statements
TOTAL segment REVENUE, profit or LOSS, and ASSETS must be RECONCILED to the ENTERPRISE'S CONSOLIDATED totals – ENSURING readers CAN trace SEGMENT-level information BACK to the OVERALL, CONSOLIDATED financial STATEMENTS.
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Worked Example – Applying the 10% Revenue Threshold
Determining which segments qualify for separate reporting
Example: A diversified group with four business lines
A group's combined segment revenue across four business lines totals RMB 1,000,000,000. Segment A generates RMB 350,000,000; Segment B, RMB 90,000,000; Segment C, RMB 460,000,000; Segment D, RMB 100,000,000.
The 10% THRESHOLD is RMB 100,000,000. SEGMENTS A (RMB 350,000,000), C (RMB 460,000,000), and D (RMB 100,000,000) MEET the THRESHOLD and are REPORTABLE SEPARATELY; SEGMENT B (RMB 90,000,000) does NOT meet the REVENUE test ALONE, though it MAY still QUALIFY if it MEETS the PROFIT or ASSETS threshold INSTEAD.
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Worked Example – Reconciling Segment Profit to Consolidated Profit
Bridging segment totals with unallocated corporate items
Example: Unallocated corporate expenses
A company's total reportable segment profit sums to RMB 200,000,000, but the group's consolidated profit before tax is RMB 175,000,000, due to RMB 25,000,000 of unallocated corporate overhead not attributed to any segment.
The company DISCLOSES a RECONCILIATION: total SEGMENT profit RMB 200,000,000 LESS unallocated CORPORATE expenses RMB 25,000,000 = CONSOLIDATED profit before TAX of RMB 175,000,000.
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Disclosure Requirements
What ASBE No. 35 requires
Factors used to identify reportable segments, and the basis of organisationSegment revenue, profit or loss, assets, and liabilitiesReconciliations of segment totals to consolidated financial statement totals
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Identifying the chief operating decision maker and the segments it reviewsWhether operating segments with similar characteristics should be aggregated
SIGNIFICANT ESTIMATES
Allocation basis for shared costs and assets across segments
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Relationship to IFRS 8
Comparison – ASBE 35 vs IFRS 8
FeatureASBE 35IFRS 8
Management approachYESYES – converged
10% quantitative thresholdsYESYES – converged
A GENUINELY thoroughly CONVERGED standard, MIRRORING IFRS 8'S management APPROACH closely.
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Statement Mapping
Where every segment disclosure lands
EventStatement(s) affectedNotes
Segment disclosuresNotes onlyNo effect on the primary financial statement figures
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Related Standards
Cross-reference map
StandardConnection
ASBE No. 33Consolidated Financial Statements – supplies the consolidated totals this Standard's reconciliations tie back to
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Quick-Reference Glossary
Operating segment
A component of an enterprise engaging in business activities, whose results are regularly reviewed by the chief operating decision maker.
Chief operating decision maker
The function responsible for allocating resources to, and assessing the performance of, an enterprise's operating segments.
Financial statement key (Chinese GAAP / ASBE terminology)
BS Balance Sheet (资产负债表)
IS Income Statement (利润表)
SCOE Statement of Changes in Owners' Equity (所有者权益变动表)
CFS Cash Flow Statement (现金流量表)
History & Development
2006-02
ASBE No. 35 Segment Reporting issued
Operative for periods beginning on or after 1 February 2007