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
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
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
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.
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.
