As 17

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As 17

  1. 1. ACCOUNTING STANDARD - 17 SEGMENT REPORTING J.P., KAPUR & UBERAI
  2. 2. OBJECTIVE <ul><li>Reporting financial information about: </li></ul><ul><li>Different types of products and services an enterprise produces, and </li></ul><ul><li>The different geographical areas in which it operates. </li></ul>J.P., KAPUR & UBERAI
  3. 3. BENEFIT TO USERS <ul><li>Better understanding of the performance of the enterprise; </li></ul><ul><li>Assess the risks and returns of the enterprise. </li></ul><ul><li>Make more informed judgements about the enterprise as a whole. </li></ul>J.P., KAPUR & UBERAI
  4. 4. APLICABILITY <ul><li>Accounting period commencing on or after April 1, 2001 in respect of following enterprises: </li></ul><ul><li>LISTED ENTERPRISES or those which are in the process of Listing </li></ul><ul><li>Enterprises with annual turnover more than Rs. 50 crores. </li></ul>J.P., KAPUR & UBERAI
  5. 5. DEFINITIONS <ul><li>What is a BUSINESS SEGMENT ? </li></ul><ul><li>Distinguishable component of an enterprise. </li></ul><ul><li>Engaged in providing an individual product or service. </li></ul><ul><li>Subject to risks and returns different from other business segments. </li></ul>J.P., KAPUR & UBERAI
  6. 6. DEFINITIONS <ul><li>What is A GEOGRAPHICAL SEGMENT ? </li></ul><ul><li>Distinguishable component of an enterprise </li></ul><ul><li>Engaged in providing products or services within a particular economic environment </li></ul><ul><li>That is subject to risks and returns that are different from those of components operating in other economic environments </li></ul>J.P., KAPUR & UBERAI
  7. 7. IDENTIFICATION OF REPORTABLE SEGMENT <ul><li>Its revenue from sales to external customers is 10 per cent more of the total revenue, or </li></ul><ul><li>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 </li></ul><ul><li>Its segment assets are 10 per cent or more of the total assets of all segments. Contd…. </li></ul>Contd…. J.P., KAPUR & UBERAI
  8. 8. IDENTIFICATION OF REPORTABLE SEGMENT <ul><li>The location of production or service facilities and other assets of an enterprise; </li></ul><ul><li>The location of its customers. </li></ul>J.P., KAPUR & UBERAI
  9. 9. IDENTIFICATION OF REPORTABLE SEGMENT <ul><li>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. </li></ul>J.P., KAPUR & UBERAI
  10. 10. COMPARATIVES <ul><li>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. </li></ul><ul><li>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. </li></ul>J.P., KAPUR & UBERAI
  11. 11. Primary and Secondary Segment Reporting 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 SEGMENT GEOGRAPHICAL SEGMENT
  12. 12. Matrix presentation J.P., KAPUR & UBERAI 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
  13. 13. DISCLOSURES J.P., KAPUR & UBERAI 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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