Question Tag: Chief Operating Decision Maker (CODM)

Fine Face (FF) Limited produces and sells a range of body care products through three separate divisions. Additionally, the company has two laboratories responsible for research and development activities.

1. First Laboratory:
   • Funded internally and centrally for each of the three sales divisions.
   • Does not perform research and development activities for external entities.
   • Each division is allocated a budget for purchasing research and development services from the laboratory.
   • The laboratory is directly accountable to the divisional heads for this expenditure.
2. Second Laboratory:
   • Performs contract investigation activities for other laboratories and body care companies.
   • Earns 75% of its revenue from external customers, representing 18% of the organization’s total revenue.
   • The head of the second laboratory is directly accountable to the Chief Operating Decision Maker (CODM), and the CODM regularly reviews its performance, operating activities, resource allocation, and financial results.

Fine Face Limited is uncertain whether the two laboratories should be reported as separate segments under IFRS 8 – Operating Segments.

Required:

Advise the directors of Fine Face Limited on this issue. (8 Marks)