Segment Reporting-As17: Compiled By: - AKHIL KOHLI (MBA - Marketing) MANJU (MBA - Finance)

Download as pptx, pdf, or txt
Download as pptx, pdf, or txt
You are on page 1of 32

SEGMENT

REPORTING- AS17

Compiled by:AKHIL KOHLI(MBA Marketing)


MANJU (MBA- Finance)

To be discussed .
OBJECTIVES
APPLICABILITY
DEFINITIONS
REPORTABLE SEGMENT
SEGMENT REPORTING FORMATS

Objective
To enable the users of financial statements to:
Better understand the performance of the

enterprise;
Better assess the risks and returns of the
enterprise;and
Make more informed judgments about the
enterprise as a whole.

Applicability of standard
Listed Companies
Companies in the process of listing their

equity or debt securities


Banks including Co-operative banks
Financial Institutions
Insurance companies

Applicability of standard
All

commercial and business reporting


enterprises having turnover exceeding Rs. 50
Crores.
All
commercial and business reporting
enterprises having borrowings including public
deposits in excess of Rs. 10 Crore at any time
during the accounting period.
Holding and subsidiary companies of above.

Definitions
Business Segment is a distinguishable
component of an enterprise
that is engaged in providing an individual
product or service or a group of related
products or services and
that is subject to risks and returns that
are different from those of other business
segments.

Factors for consideration of business


segment
Nature of products or services
Nature of product processes
Type or class of customers for the product

or services
Methods used to distribute the products or
provide the services
The nature of regulatory environment, for
example, banking, insurance or public
utilities.

Geographical Segment - Definition


Geographical segment is a distinguishable
component of an enterprise:
that

is engaged in providing products or


services
within
a
particular
economic
environment; and
that is subject to risks and returns that are
different from those of components operating in
other economic environments.

Factors for determination of


geographical segment
Similarity of economic and political

conditions;
Relationships between operations in
different geographical areas;
Proximity of operations;
Special risks associated with operations in a
particular area
Exchange control regulations
The underlying currency risks.

Segment Reportingformats
Segment reporting is to be made as
Primary Segment Reporting
Secondary Segment Reporting

Dominant source and nature of risks and


returns will govern whether the business
segment or the geographical segment
will be reported as primary segment
reporting format.

Reportable segment
A business or geographical segment is a reportable
segment only if:
Its revenue from sales to external customers
and from transactions with other segments is
10% or more of the total revenue, external and
internal, of all segments; or
Its segment result whether profit or loss is 10%
or more of
The combined result of all segments in
profit; or
The combined result of all segments in
loss,
Whichever is greater in absolute amount;

Reportable segment
its segment assets are 10% or more of the total
assets of all segments.

Any segment may be treated as reportable segment


by the management. If not designated as a
reportable segment, it should be included as an
unallocated reconciling item.

Segment Revenue
Segment revenue is the aggregate of
(i)
the portion of enterprise revenue
that is directly attributable to a segment.
(ii) the relevant portion of enterprise
revenue that can be allocated on a
reasonable basis to a segment, and
(iii) revenue from transactions with other
segments of the enterprise.

Exclusions from Segment revenue


(a) Extraordinary items.
(b) Interest or dividend

income, including
interest earned on advances or loans to
other segments unless the operations of the
segment are primarily of a financial
nature;and
(c) Gains on sales of investments or on
extinguishment of debt unless the operations
of the segment are primarily of a financial
nature.

Segment Expenses
Segment expense is the aggregate of
(a) the expense resulting from the operating
activities of a segment that is directly
attributable to the segment, and
(b) the relevant portion of enterprise
expense that can be allocated on a
reasonable basis to the segment including
expense relating to transactions with other
segments of the enterprise.

Segment ExpenseExclusions
Extraordinary items
Interest expense including interest incurred on

advances or loans from other segments,


unless the operations of the segment are
primarily of a financial nature;
Losses on sales of investments or losses on
extinguishment of debt unless the operations
of the segment are primarily or a financial
nature;

Segment ExpenseExclusions
Income-tax expense
General administrative expenses, head-office

expenses, and other expenses that arise at


the enterprise level and relate to the
enterprise as a whole.

Segment Assets
Segment assets are those operating assets

that are employed by a segment in its


operating activities and that either are
directly attributable to the segment or can be
allocated to the segment on a reasonable
basis.

Segment Liabilities
Segment

liabilities are those operating


liabilities that result from the operating
activities of a segment and that either are
directly attributable to the segment or can be
allocated to the segment on a reasonable
basis.

Primary Reporting Format


1. Segment Revenue classified into
From sales to external customers;and
Segment revenue from transactions
with other segments.
2. Segment result i.e. Segment revenue less

segment expense.
3. Total carrying amount of segment assets;
4. Total amount of segment liabilities;

Primary Reporting Format


5. Total cost incurred during the period to

acquire segment assets that are expected


to be used during more than one period.
6. Total amount of expense included in
segment result for depreciation and
amortisation in respect of segment assets
for the period.

Primary Reporting Format


7. Total

amount of significant non-cash


expenses, other than depreciation and
amortisation in respect of segment assets,
that were included in segment expense.

Reconciliation Statement
A

reconciliation between information for


reportable
segment
and
aggregated
information in enterprise financial statements
is required to be presented.

Secondary Reporting
Format
If the primary format is Business Segment:
Segment Revenue from External Customers
based on Customer location for each
geographical segment
Total carrying amount of segment assets by
geographical location of assets.

Secondary Reporting
Format
The total cost incurred during the year to

acquire segment assets that are expected to


be used during more than one period.

Secondary Reporting
Format
If the primary format is geographical segment,
the following information for each business
segment:

segment revenue from external


customers;
the total carrying amount of segment
assets; and
total cost incurred during the year to
acquire the segment assets.

Other Requirements:
If primary format is geographical segment
based on location of assets and the location
of its customers is different, Revenue from
external customers for each geographical
segment is also required to be reported.

Other Requirements
Similarly, if the geographical segment is based
on location of customers and the location of
assets is different, the following information
need to be reported:
total

carrying amount of segment


assets by geographical location.
total cost incurred during the period to
acquire segment assets.

You might also like