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Segment Reporting in Accounting

Accounting Standard 17 outlines requirements for segment reporting in a company's financial statements. It requires companies to report financial information for different business segments and geographical regions. This helps users better understand a company's performance, risks, and returns. The standard applies to listed companies and large unlisted companies. It defines business and geographical segments and provides guidance on identifying reportable segments to disclose based on certain revenue and asset thresholds. Companies must disclose key financial data for each reportable segment.

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Priyanka Shaurabh Tiwari
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231 views13 pages

Segment Reporting in Accounting

Accounting Standard 17 outlines requirements for segment reporting in a company's financial statements. It requires companies to report financial information for different business segments and geographical regions. This helps users better understand a company's performance, risks, and returns. The standard applies to listed companies and large unlisted companies. It defines business and geographical segments and provides guidance on identifying reportable segments to disclose based on certain revenue and asset thresholds. Companies must disclose key financial data for each reportable segment.

Uploaded by

Priyanka Shaurabh Tiwari
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd

ACCOUNTING STANDARD - 17

SEGMENT REPORTING

OBJECTIVE
Reporting financial information about:

Different types of products and services an enterprise produces, and The different geographical areas in which it operates.

BENEFIT 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.

APLICABILITY
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.

DEFINITIONS
What is a BUSINESS SEGMENT ?
Distinguishable Engaged

component of an enterprise.

in providing an individual product or

service.
Subject

to risks and returns different from other business segments.

DEFINITIONS
What is A GEOGRAPHICAL SEGMENT ?
Distinguishable Engaged

component of an enterprise

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

That

IDENTIFICATION OF REPORTABLE 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.

IDENTIFICATION OF REPORTABLE SEGMENT

The location of production or service facilities and other assets of an enterprise; The location of its customers.

IDENTIFICATION OF REPORTABLE 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.

COMPARATIVES
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.

Primary and Secondary Segment Reporting Formats


If RISKS AND RETURNS are affected by

Differences in the products and services

Operation in different countries or geographical areas

BUSINESS SEGMENT

GEOGRAPHICAL SEGMENT

Matrix 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

DISCLOSURES
a. Segment revenue from sales to external customers b. Segment revenue from transactions with other segments c. Segment result d. 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 period h. Significant other non-cash expenses

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