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Chapter 13

1.2 Definitions

An operating segment is a component of an entity:

 that engages in business activities

 whose results are regularly reviewed by the chief operating
decision maker

 for which discrete financial information is available.

This means that the operating segments disclosed in the financial statements should
be the same as those disclosed and reviewed in internal management reports.

1.3 Aggregation

Two or more operating segments can be reported as a single operating segment
provided that they have similar economic characteristics, and they are similar in
terms of:

 the products or services they sell

 production processes

 types of customers

 distribution methods.

Illustrations and further practice

Now try TYU question 1 from Chapter 13.

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