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ACCOUNTING STANDARD - 17
SEGMENT REPORTING
J.P., KAPUR & UBERAI
OBJECTIVEOBJECTIVE
Reporting financial information about:
Different types of products and services an enterprise produces, and
The different geographical areas in which it operates.
J.P., KAPUR & UBERAI
BENEFIT TO USERSBENEFIT TO USERS
Better understanding of the performance of the enterprise;
Assess the risks and returns of the enterprise.
Make more informed judgements about the enterprise as a whole.
J.P., KAPUR & UBERAI
APLICABILITYAPLICABILITY
Accounting period commencing on or after April 1, 2001 in respect of following enterprises:
LISTED ENTERPRISES or those which are in the process of Listing
Enterprises with annual turnover more than Rs. 50 crores.
J.P., KAPUR & UBERAI
DEFINITIONSDEFINITIONS
What is a BUSINESS SEGMENT ?
Distinguishable component of an enterprise.
Engaged in providing an individual product or service.
Subject to risks and returns different from other business segments.
J.P., KAPUR & UBERAI
DEFINITIONSDEFINITIONS
What is A GEOGRAPHICAL SEGMENT ?
Distinguishable component of an enterprise
Engaged in providing products or services within a particular economic environment
That is subject to risks and returns that are different from those of components operating in other economic environments
J.P., KAPUR & UBERAI
IDENTIFICATION OF IDENTIFICATION OF REPORTABLE SEGMENTREPORTABLE SEGMENT
Its revenue from sales to external customers is 10 per cent more of the total revenue, or
Its segment result, whether profit or loss, is 10 per cent or more of the combined result of all segments in profit or loss, or
Its segment assets are 10 per cent or more of the total assets of all segments.
Contd….
Contd….
J.P., KAPUR & UBERAI
IDENTIFICATION OF IDENTIFICATION OF REPORTABLE SEGMENTREPORTABLE SEGMENT
The location of production or service facilities and other assets of an enterprise;
The location of its customers.
J.P., KAPUR & UBERAI
IDENTIFICATION OF IDENTIFICATION OF REPORTABLE SEGMENTREPORTABLE SEGMENT
If total revenue attributable to all reportable segment is less than 75% of the total enterprises revenue, additional segments should be identified as reportable segments, even if they do not meet the 10% thresholds, until at least 75% of total enterprises revenue is included in reportable segments.
J.P., KAPUR & UBERAI
COMPARATIVESCOMPARATIVES
If a segment is identified as a reportable segment in the current period, preceding period segment data is presented for comparative purpose, even if that segment did not satisfy the 10% threshold in the preceding period.
A segment identified as a reportable segment in the immediately preceding period should continue to be a reportable segment for the current period even if it does not meet the 10% threshold.
J.P., KAPUR & UBERAI
Primary and Secondary Segment Primary and Secondary Segment Reporting FormatsReporting Formats
J.P., KAPUR & UBERAI
If RISKS AND RETURNS are affected by
Differences in the Operation in different products and services countries or
geographical areas
BUSINESS SEGMENTGEOGRAPHICAL SEGMENT
J.P., KAPUR & UBERAI
Matrix presentationMatrix presentation
If the risk & return of an enterprise are equally effected by differences in the products and services it produces and by differences in the geographical areas in which it operates, then the enterprise should use BUSINESS SEGMENTS as its PRIMARY SEGMENT reporting format and GEOGRAPHICAL SEGMENTS as its SECONDARY REPORTING format & full segment disclosures is given on each basis
J.P., KAPUR & UBERAI
DISCLOSURESDISCLOSURES
a. Segment revenue from sales to external customers b. Segment revenue from transactions with other
segmentsc. Segment resultd. Total carrying amount of segment assets; e. Total amount of segment liabilities; f. Additions to tangible and intangible fixed assets; g. Depreciation and amortisation for the periodh. Significant other non-cash expenses