This document discusses principles for segment reporting, related party disclosures, provisions, contingent liabilities, contingent assets, and provisions for restructuring costs. It defines key terms and outlines criteria for recognizing, measuring and disclosing these items in financial statements to provide transparent and useful information to users.

1. By
Rajan Dasgupta
Digen Pd Sah
Nirbhay Kumar

2. SEGMENT REPORTING

3. To establish the principles for reporting
financial information about the
different types of products and services
an enterprises produces and different
geographical areas in which it operates

4. • To better understand the performance of the enterprise
• To better assess the risks & returns of the enterprise
• To make more informed judgement about the
enterprises as a whole .

5. Business Segment:
• It is distinguishable component of an enterprise
• It is engaged in providing an individual product
or services
• It is subject to risk & returns that are different
from those of other business segment .

6. 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

7. Definitions
•Enterprise Revenue
•Segment Revenue
•Segment Expense
•Segment Result
•Segment Assets
•Segment Liabilities

8. • Segment revenue – 10% or more
• Segment result – 10% or more
• Segment asset – 10% or more
• Segment - Management discretion
• At least 75% of total external revenue

9. Reportable Segments
Primary Secondar
y

10. Risks & return mainly effect by difference in product
• Primary – Business
• Secondary – Geographical
Risks & return mainly effect by geographical area
• Primary – Geographical
• Secondary – Business

11. Risks & return mainly effect by both of by
difference in product & its operation in different
geographical area
• Primary – Business
• Secondary – Geographical

12. •Segment Revenue from
sales to external customers
•Segment revenue from
transactions with other
segments
•Segment Result
•Total carrying amount of
segment assets

13. •Total segment liabilities
•Additions to tangible & intangible fixed assets
•Depreciation & ammortisation for the period
•Significant other non-cash expenses

14. RELATED PARTY
DISCLOSURE

15. Sometimes business transactions
between related parties lose the
feature and character of the arms
length transaction.

16. • Holding companies(a company having one or more subsidiaries),
Subsidiaries & Fellow subsidiaries(a company is considered to be
fellow susidiary of another company if both are susidiaries of the
self holding company)
• Associates(an enterprise in which an investing reporting party has
significant influence and which is neighter an subsidiary nor a joint
venture of that party) & Joint venture(The cooperation of two or
more individuals or businessness in which each agrees to share
profit,loss and control in a specific enterprise)
• Individuals owing , directly or indirectly interest in the voting power

17. • Relative of such individual –Spouse, son,
daughter, mother, father, brother, sister.
. Key management personnel(those persons
who have the authority and resposibility for
planning, directing and controlling the
activities of the reporting enterprise) &
relative of such personnel

18. • Related party relationship
• Transactions between a reporting enterprises and its
related parties

19. • Control by ownership (directly or indirectly more than
50% of the voting power
• Control over composition of BOD or other governing
body
• Control of substantial interest in the voting power &
power to direct the financial or operating policies of the
enterprise

20. • By representation of the Board of Directors
• Participation in policy-making process
• Material inter-company transactions
• Inter-charge of management personnel
• Dependence on technical information

21. • Two companies have a director in common dealing
between the companies
• A Single customer or supplier or distributor
• Provider of finance
• enterprises.

22. • Trade union
• Govt. department & agencies
• State controlled enterprises with other State
controlled enterprises.

23. • Purchase/Sales of goods
• Purchase/Sales of fixed assets
• Rendering /receiving of services
• Leasing or hire purchase arrangements

24. • Transfer of research and development
• License agreement
• Finance (incl. loan & equity)
• Guarantees & collateral
• Management contracts of deputation employees

25. • Name of the related party should be
disclosed
• Nature of the related party
relationship should be disclosed

26. • Name of the related party
• Description of related party
• Description of the nature of transaction
• Volume of the transactions either as an amount or as an
appropriate proportion

27. • Any other element of the transaction, which is essential
for understanding the financial statements
• Amount or appropriate proportion of outstanding items
& provision for doubtful debts
• Amount written off or written back in the period in
respect of debts due from doubtful debts.

28. PROVISIONS,
CONTINGENT
LIABILITIES &
CONTINGENT ASSETS

29. To prescribed the accounting for –
 Provisions
 Contingent liabilities
 Contingent assets
 Provision for restructuring cost

30. Provision is liability
What is liability
• Liability is a present obligation
• Arising from past events
• Settlement of which result in outflow of
resources

31. What is Present Obligation
An obligation is present obligation
if based on evidence available its
existence in the balance sheet date
is considered probable i.e., more
likely than not.

32. Onerous Contract
A contact in which the unavoidable
costs of meeting the obligation
under the contract exceed the
economic benefits expected to be
recovered under it.

33. Recognition of Provision
• Present probable obligation as a result of a past
obligating event
• An outflow of resources embodying economic benefits
in settlement
• A reliable estimate
• Number of similar obligations – to consider the outflow
of resources ‘probable’ obligation as a whole to be
considered

34. Measurement of provision
• Best estimate of the expenditure required
• No discounting
• No tax effect
• Additional evidence after balance sheet to be
considered
• Re-imbursement of expenditure
• Review of provision

35. Contingent Liability
• Possible obligation (not probable) as a result of past
event.
• Existence of which will be confirmed only by the
occurrence or non-occurrence of future event.
• Future event not wholly within the control of the
.
enterprises

36. Contingent Liability
Contingent liability is a possible obligation however it
may also be a present obligation
• Probability of outflow of resources is very low.
• Reliable estimate of the amount of the present
obligation cannot be made.

37. What is Contingent Assets?
• Possible asset as a result of past events.
• Existence of contingent assets is to be confirmed by the
occurrence & non-occurrence of one or more future
events.
• Future event not wholly within the control of the
enterprise .

38. Recognition Principles of
Contingent Asset
• An enterprise should not recognise a
contingent asset
• No disclosure is required of contingent
asset

39. Provision for Restructuring Cost
• AS-29 deals with provision of
restructuring cost
• AS-29 does not prescribe the accounting
of restructuring cost

40. What is Restructuring ?
• Sale or termination of line of business.
• Relocation of business activities from one
country or region to another.

41. What is Restructuring ?
• Change in management structure
• Fundamental re-organization that has
material effect on the nature & focus of
the enterprise operations

42. Restructuring does not include
• Retraining or relocating continuing staff
• Marketing
• Investment in new system & distribution networks

43. What is Restructuring Cost?
Provision for restructuring cost should
include only the direct expenditure
arising from restructuring & not
associated with the ongoing activities
of the enterprises.

44.  Financial Instrument carried at Fair Value.
 Resulting from Executory Contract.
 Insurance Enterprise
 Those covered under another Accounting
Standards..
 A.S-7, A.S-15, A.S-19, A.S-22.