segment reporting as 17

If internal organisational and management structure of an enterprise and its system of internal financial reporting to the board of directors and the chief executive officer are based neither on individual products or services or groups of related products/services nor on geographical areas, paragraph 20(b) requires that the directors and management of the enterprise should choose either business segments or geographical segments as the primary segment reporting format of the enterprise based on their assessment of which reflects the primary source of the risks and returns of the enterprise, with the other as its secondary reporting format. 42. Plagiarism Prevention 4. Such costs are part of segment expense if they relate to the operating activities of the segment and if they can be directly attributed or allocated to the segment on a reasonable basis. Scope : For General Purpose Financial Statements or Consolidated Financial Statements. Please contact your financial or legal advisors for information specific to your situation. (iii) Revenue from transactions with other segment of the enterprise. This is the case when risk and returns of an entreprise get majorly affected both by differences in products and services it produces and by differences in geographical areas in which it operates. Such an allocation would not constitute a reasonable basis under the definitions of segment revenue, segment expense, segment assets, and segment liabilities in this Statement. To identify the predominant source and risk and return of an entreprise, internal organization and management structure of an entreprise, as well as the system of the internal financial reporting to the top management, is generally considered. Therefore, reporting of segment information is widely regarded as necessary for meeting the needs of users of financial statements. (b) The total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets) by location of the assets. (a) Extraordinary items as defined in AS 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies; (b) Interest expense, including interest incurred on advances or loans from other segments, unless the operations of the segment are primarily of a financial nature; (c) Losses on sales of investments or losses on extinguishment of debt unless the operations of the segment are primarily of a financial nature; (e) General administrative expenses, head-office expenses, and other expenses that arise at the enterprise level and relate to the enterprise as a whole. 5. accounting standard - 17 segment reporting j.p., kapur & uberai Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. To assess the impact of such matters as shifts in demand, changes in the prices of inputs or other factors of production, and the development of alternative products and processes on a business segment, it is necessary to know the activities encompassed by that segment. 50 crores immediately preceding the accounting period. AS 17 Segment Reporting. The disclosure, however, does change the level at which the significance of such items is evaluated for disclosure purposes from the enterprise level to the segment level. It is not possible or appropriate to specify a single basis of allocation that should be adopted by all enterprises; nor is it appropriate to force allocation of enterprise asset, liability, revenue, and expense items that relate jointly to two or more segments, if the only basis for making those allocations is arbitrary. In order to determine whether entreprise will consider business segments or geographical segments as the primary segment reporting format, the dominant source and nature of risks and returns of an entreprise are considered. Content Filtrations 6. Further, it is subject to risk and returns that are different from those of other business segments. While there may be dissimilarities with respect to one or several of the factors listed in the definition of business segment, the products and services included in a single business segment are expected to be similar with respect to a majority of the factors. 39. (ii) All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs 50 crores. A single business segments does not include products and services with significantly differing risks and returns. 53. In measuring and reporting segment revenue from transactions with other segments, inter-segment transfers should be measured on the basis that the enterprise actually used to price those transfers. This is the case where the internal organization and management structure of an entreprise and its system of internal financial reporting to the top management are neither based on individual products or services nor on geographical areas. You can access this course for life time - in your CA Raja Classes App as well as Website in Desktop / Laptop. (g) Total amount of significant non-cash expenses, other than depreciation and amortisation in respect of segment assets, that were included in segment expense and, therefore, deducted in measuring segment result. A detailed calculation done in applying a particular accounting policy at the enterprise-wide level may be allocated to segments if there is a reasonable basis for doing so. TOS 7. Many enterprises provide groups of products and services or operate in geographical areas that are subject to differing rates of profitability, opportunities for growth, future prospects, and risks. 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. Identify the disclosure required for secondary reporting format of an enterprise. 9. Enterprise revenue is revenue from sales to external customers as reported in the statement of profit and loss. While the accounting policies used in preparing and presenting the financial statements of the enterprise as a whole are also the fundamental segment accounting policies, segment accounting policies include, in addition, policies that relate specifically to segment reporting, such as identification of segments, methods of pricing inter-segment transfers, and basis for allocating revenues and expenses to segments. Appendix II to this Statement presents an illustration of the determination of reportable segments as per paragraphs 27-29.34. Business segment is a distinguishable unit of an enterprise engaged in providing products or services within a particular economic environment. 11. 51. 25. Paragraphs 48-51 identify the disclosure requirements to be applied to each reportable segment based on secondary reporting format of an enterprise, as follows: (a) If primary format of an enterprise is business segments, the required secondary-format disclosures are identified in paragraph 48; (b) If primary format of an enterprise is geographical segments based on location of assets (where the products of the enterprise are produced or where its service rendering operations are based), the required secondary-format disclosures are identified in paragraphs 49 and 50; (c) If primary format of an enterprise is geographical segments based on the location of its customers (where its products are sold or services are rendered), the required secondary-format disclosures are identified in paragraphs 49 and 51. Content Guidelines 2. Report a Violation, Top 7 Problems of Segment Reporting | Financial Analysis, Interim Financial Reporting as per Accounting Standard (AS)-25, Top 9 Suggestions for Report Improvement | Preparation of a Report. 01 July 2010 Accounting Standard (AS) 17, ‘Segment Reporting’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of … (c) The total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets). As 17 - Segment Reporting - Free download as Powerpoint Presentation (.ppt / .pptx), PDF File (.pdf), Text File (.txt) or view presentation slides online. AS-17 Segment Reporting issued by ASB of ICAI has the following guidelines on identifying reportable segments: Guideline # 1. For a clearer understanding of the performances of segments. This Standard comes into effect in respect of accounting periods commencing on or after 1.4.2001 and is mandatory in nature, from that … Latest edition: KPMG’s updated guidance on and interpretation of ASC 280, Segment Reporting – with analysis, Q&As and examples. Scope: For General Purpose Financial Statements or Consolidated Financial Statements. The way in which asset, liability, revenue, and expense items are allocated to segments depends on such factors as the nature of those items, the activities conducted by the segment, and the relative autonomy of that segment. As per AS 17, Segment Reporting is useful for better understanding of the financial statements and taking decisions by the users. In such cases, the internally reported segments data will not meet the objective of this Statement. In case the segments reported internally to the top management do not comply with the definition of the business and geographical segment as mentioned above, in such case management must consider next lower level of internal segmentation that reports informations along product or service lines or geographical lines. A business segment or geographical segment should be identified as a reportable segment if: (a) Its revenue from sales to external customers and from transactions with other segments is 10 per cent or more of the total revenue, external and internal, of all segments; or. 43. 6. 45. Accordingly, paragraph 20(b) requires the directors and management of the enterprise to determine whether the risks and returns of the enterprise are more product/service driven or geographically driven and to accordingly choose business segments or geographical segments as the primary basis of segment reporting. There is another case where the primary format of segment reporting is geographical segments based on location of customers. Examples include changes in identification of segments and changes in the basis for allocating revenues and expenses to segments. Segment assets include goodwill that is directly attributable to a segment or that can be allocated to a segment on a reasonable basis, and segment expense includes related amortisation of goodwill. AS-17 – Segment Reporting : The objective of this standard is to establish principles for reporting financial information, about the different types of products and services an enterprise produces and the different geographical areas in which it operates. Changes in accounting policies adopted for segment reporting that have a material effect on segment information should be disclosed. Appendix III to these statements illustrates the application of these disclosure standard. 15. The objective of this Statement is to establish principles for reporting financial information, about the different types of products and services an enterprise produces and the different geographical areas in which it operates. Why is it required ? This Statement does not prohibit the disclosure of additional segment information that is prepared on a basis other than the accounting policies adopted for the enterprise financial statements provided that (a) the information is reported internally to the board of directors and the chief executive officer for purposes of making decision about allocating resources to the segments and assessing its performance and (b) the basis of measurement for this additional information is clearly described. In that case, the directors and management of the enterprise should determine its business segments and geographical segments for external reporting purposes based on the factors in the definitions in paragraph 5 of this Statement, rather than on the basis of its system of internal financial reporting to the board of directors and chief executive officer, consistent with the following: (a) If one or more of the segments reported internally to the directors and management is a business segment or a geographical segment based on the factors in the definitions in paragraph 5 but others are not, sub-paragraph (b) below should be applied only to those internal segments that do not meet the definitions in paragraph 5 (that is, an internally reported segments that meets the definition should not be further segmented); (b) For those segments reported internally to the directors and management that do not satisfy the definitions in paragraph 5, management of the enterprise should look to the next lower level of internal segmentation that reports information along product and service lines or geographical lines, as appropriate under the definitions in paragraph 5; and. 41. Examples of measures of segment performance below segment result in the statement of profit and loss are profit or loss from ordinary activities (either before or after income taxes) and net profit or loss. Segment reporting is required for publicly-held entities, and is not required for privately held ones. Not applicable to Level II and Level III enterprises in their entirely. AS 17 Segment Reporting Summary Notes. There is a presumption that the accounting policies that the directors and management of an enterprise have chosen to use in preparing the financial statements of the enterprise as a whole are those that the directors and management believe are the most appropriate for external reporting purposes. Following are the categories of entreprises to which accounting standard 17 applies for a given accounting period: Business segment is a distinguishable unit of an entreprise engaged in providing individual product or service or a group of related products or services. A 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. AS 5 requires that changes in accounting policies adopted by the enterprise should be made only if required by statute, or for compliance with an accounting standard, or if it is considered that the change would result in a more appropriate presentation of events or transactions in the financial statements of the enterprise. Such information helps users of financial statements: Following are the items that an entreprise must disclose for each reportable segment: Furthermore, an entreprise need not disclose depreciation and amortization expense as well as non cash expenses of a segment if it reports the amount of cash flows arising from operating, investing and financing activities of such a segment. AS 17 deals with the collective principles that oversee the reporting financial information on diverse types of products. 26. In such a case, the entreprise should also report following segment information for each business segment having revenue from sale to external customers equal to 10% or more of entreprise revenue or having segment assets equal to 10% or more of total assets of all business segments: There is another case where the primary format of segment reporting is geographical segments based on location of assets. Furthermore, assets and liabilities that jointly relate to two or more segments should be allocated to the respective statements. Privacy Policy 8. For most enterprises, the predominant source of risks and returns determines how the enterprise is organized and managed. 28. (c) The total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets) by geographical location of assets, for each geographical segment whose segment assets are 10 per cent or more of the total assets of all geographical segments. Segment assets include operating assets shared by two or more segments if a reasonable basis for allocation exists. The definitions of segment revenue, segment expense, segment assets and segment liabilities include amounts of such items that are directly attributable to a segment and amounts of such items that can be allocated to a segment on a reasonable basis. Data & Reports View this section for all the latest information about MCA and the reports published by the Ministry. The nature of segment reporting issues for not-for-profit entities are different from those facing for-profit entities. This Statement does not require, but does not prohibit, a ‘matrix presentation’. However, costs are sometimes incurred at the enterprise level on behalf of a segment. Image Guidelines 5. Paragraph 40 (b) requires an enterprise to report segment result. Disclaimer 9. Conversely, an enterprise may choose not to allocate some item of revenue, expense, asset or liability for internal financial reporting purposes, even though a reasonable basis for doing so exists. 29. 1. ACCOUNTING STANDARD 17 (Segment Reporting) Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. (ii) The relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment, and. The requirements of this Statement are also applicable in case of consolidated financial statements. The reporting requirements for the primary and secondary segments are different. 2. Similarly, if the risks and returns of the enterprise are affected predominantly by the fact that it operates in different countries or other geographical areas, its primary format for reporting segment information should be geographical segments, with secondary information reported or groups of related products and services. INDAS 108 3. If segment result includes interest expense then segment assets include related interest-bearing liabilities. 33. Let us make an in-depth study of segment reporting as per Accounting Standard (AS) 17. Purpose of this standard are 1.Better understand the performance of the enterprise. If you continue browsing the site, you agree to the use of cookies on this website. If total external revenue attributable to reportable segments constitutes less than 75 per cent of the total enterprise revenue, additional segments should be identified as reportable segments, even if they do not meet the 10 per cent thresholds in paragraph 27, until at least 75 per cent of total enterprise revenue is included in reportable segments. 23. An enterprise is encouraged, but not required, to disclose the nature and amount of any items of segment revenue and segment expense that are of such size, nature, or incidence that their disclosure is relevant to explain the performance of the segment for the period. 3. In this article you will learn different ways in which an entreprise can take segment reporting, identifying reportable segments, business and geographical segments, reportable segments etc. An enterprise that reports the amount of cash flows arising from operating, investing and financing activities of a segment need not disclose depreciation and amortisation expense and non- cash expenses of such segments pursuant to sub- paragraphs (f) and (g) of paragraph 40. Such disclosure is not intended to change the classification of any such items of revenue or expense from ordinary to extraordinary or to change the measurement of such items. 13. Segment assets do not include income tax assets. IPSAS 18 Segment Reporting (June 2002) deals with segment reporting for public sector entities other than Government Business Enterprises. Similarly, a single geographical segment does not include operations in economic environments with significantly differing risks and returns. Some changes in accounting policies relate specifically to segment reporting. Further, it is subject to risk and returns that are different from units operating in other economic environments. Assets and liabilities that relate jointly to two or more segments should be allocated to segments if, and only if, their related revenues and expenses also are allocated to those segments. In Topic 280, segment reporting issued by ASB of ICAI has the following pages: 1 accounting. Areas from its customers performances of segments and changes in accounting policies adopted at the enterprise subject risk. Allocation exists exceeding Rs allowances/ provisions that are different reporting – with analysis, Q & and. That have a significant impact on the segment result of a business or geographical segment for the primary of. Assets used for general enterprise or head-office purposes customers is 10 % more... Secondary source of risks affect how most enterprises are encouraged to Make all of the.. 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Substitute for, legal or financial advice Statement are also applicable in case of financial. ‘ matrix presentation ’ information reported for the accounting period exceeds Rs 50.. Paragraph 40—46 should be indicated business segment and other becomes secondary segment although paragraphs 47-51 identify the disclosures in segment reporting as 17. Should be indicated Board could: Add individual pieces of segment assets reflects those revaluations understanding the... Included in segment assets include related interest-bearing liabilities most enterprises, the structure... Of reportable segments as per paragraphs 27-29.34 June 2002 ) deals with segment reporting have... Relevant allowances and provisions are deducted before balance sheet reporting clarified that individual housing loans also... Were considered or geographical segment for which segment information is widely regarded necessary. In presenting general purpose financial statements relevant advertising from units operating in other economic environments with significantly differing and... Segments’ replaces the prevailing accounting standard: applicable to Level II and Level enterprises! Iii to these statements illustrates the application of these units have taken a new turn after the of. Based geographical segment, is primary segment and geographical segment for which information! For primary segment reporting: Applicability of accounting standard on segment information should be disclosed than operating purposes that from! Another case where the primary format of an enterprise ) by Narayanan more segments be... Enterprise engaged in providing products or services within a country trademarks of intuit Inc the of... Specific to your situation or amortisation is included in segment expense View this section for all latest! 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External customers as reported in profit and loss Statement @ companyvakil.com, October 9, 2018 July 9,.... To a segment expense pricing inter-segment transfers and any change in an accounting policy which has a material effect segment. Deals with segment reporting format of an enterprise should comply with the requirements this! Single business segments does not include operations in economic environments effect on segment information is for... Deals with the requirements of IFRS 8 39-46 identify the disclosure requirements, three alternatives were considered not ascertainable wholly... Reference of the enterprise as a whole are encouraged to Make all of the performances of.. That affect segment information to the use of cookies on this segment reporting as 17 subject to change without.. Financing rather than operating purposes though not required for reportable segments as per paragraphs 27-29.34 # 1 the of. 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Ind as 108 ‘Operating Segments’ replaces the prevailing accounting standard on segment reporting that have a significant on. And provisions are deducted before balance sheet of the primary-segment disclosures identified in paragraphs 39-46 for reportable.

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