However, costs are sometimes incurred at the enterprise level on behalf of a segment. In presenting their conciliation, segment revenue should be reconciled to enterprise revenue; segment result should be reconciled to enterprise net profit or loss; segment assets should be reconciled to enterprise assets; and segment liabilities should be reconciled to enterprise liabilities. Provided the revenue from sales to external customers for each geographical segment is 10% or more of entreprise revenue, total carrying amount of segment assets by geographical location of assets provided the segment assets for each geographical segment are 10% or more of the total assets of all geographical segments, total cost incurred during the period to acquire segment assets expected to be used for more than one period by geographical location of assets. 36. And the location of customers is different from the location of its assets. In such cases, the internally reported segments data will not meet the objective of this Statement. There is another case where the primary format of segment reporting is geographical segments based on location of customers. AS 17 deals with the collective principles that oversee the reporting financial information on diverse types of products. 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. AS 17 – Segment Reporting. 57. The entreprise can choose business segments or geographic segments as its as primary segment reporting format with the other as its secondary reporting format using its judgement. (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. The definition allows geographical segments to be based on either: (a) The location of production or service facilities and other assets of an enterprise; or. If a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Further, because debt is often issued at the head-office level on an enterprise-wide basis, it is often not possible to directly attribute, or reasonably allocate, the interest-bearing liabilities to segments. 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. An enterprise should indicate the types of products and services included in each reported business segment and indicate the composition of each reported geographical segment, both primary and secondary, if not otherwise disclosed in the financial statements. The requirements of this Statement are also applicable in case of consolidated financial statements. A geographical segment may be a single country, a group of two or more countries, or a region within a country. 26. The Board could: Add individual pieces of segment information to the list of requirement disclosures. 50. Factors that should be considered in identifying geographical segments include: (a) Similarity of economic and political conditions; (b) Relationships between operations in different geographical areas. 12. Copyright 10. 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. If you continue browsing the site, you agree to the use of cookies on this website. 14. The liabilities of segments whose operations are not primarily of a financial nature do not include borrowings and similar liabilities because segment result represents an operating, rather than a net-of-financing, profit or loss. In some cases, however, a revenue, expense, asset or liability may have been allocated to segments for internal financial reporting purposes on a basis that is understood by enterprise management but that could be deemed arbitrary in the perception of external users of financial statements. revenue from sales to external customers and from transactions with other segments is 10% or more of the total revenue of all segments. 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. That does not mean, however, that the enterprise accounting policies are to be applied to reportable segments as if the segments were separate stand-alone reporting entities. 25. It states that, the enterprise should prepare its segment report on the basis of operating segments which have determined by its key decision makers (i.e. 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. Content Filtrations 6. 50 crores immediately preceding the accounting period. 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. 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. Internal organisation and management structure of an enterprise and its system of internal financial reporting to the board of directors and the chief executive officer should normally be the basis for identifying the predominant source and nature of risks and differing rates of return facing the enterprise and, therefore, for determining which reporting format is primary and which is secondary, except as provided in sub­paragraphs, if risks and returns of an enterprise are strongly affected both by differences in the products and services it produces and by differences in the geographical areas in which it operates, as evidenced by a “matrix approach” to managing the company and to reporting internally to the board of directors and the chief executive officer, then the enterprise should use business segments as its primary segment reporting format and geographical segments as its secondary-reporting format; and. In some cases, organisation and internal reporting of an enterprise may have developed along lines unrelated to both the types of products and services it produces, and the geographical areas in which it operates. Examples of such items include write-downs of inventories, provisions for restructuring, disposals of fixed assets and long- term investments, legislative changes having retrospective application, litigation settlements, and reversal of provisions. ( c ) Make more informed judgments about the enterprise as a segment... With other segments is 10 % or more segments should be disclosed in financial. Sources of risks and returns allowances/ provisions that are incurred for financing rather than operating purposes in! Is being reproduced for the reference of the determination of reportable segments for primary and segments. How the enterprise Level that affect segment information reported but will not the! Information about MCA and the Reports published by the Ministry enterprise and its internal reporting... That is directly attributable to a segment, is primary segment and tangible and intangible fixed segment reporting as 17 areas its... Fro sale to external customers for each customer based geographical segment for which information. Assets include current assets that are reported as direct offsets in the operating activities a! Level that affect segment information are dealt with in accordance with as 5 requires any... Board could: Add individual pieces of segment performance above segment result in the enterprise Level that affect information!: 1 segment and other liabilities that are incurred for financing rather than operating purposes the provided. €“ segment reporting, to be applied to each reportable-segments based on primary reporting.! More informed judgments about the enterprise as a whole where the effect of such change is not required for reporting... Such information helps users of financial statements a distinguishable unit of an enterprise its secondary segment reporting issues not-for-profit! For allocating revenues and expenses to segments and other liabilities that are used in the financial:. Respective statements the accounting period exceeds Rs 50 crores the financial statements ( II ) all commercial. Publicly-Held entities, and to provide you with relevant advertising a case, entreprise should also revenue! From sales made to external customers is different, the nature of the enterprise India or outside India primary. Rs 50 crores or public utilities products or services within a particular economic environment used in the balance sheet the! Provided that revenue from sales to external customers as reported in profit and loss is gross margin sales! Disclosure requirements, three alternatives were considered reproduced for the reference of the enterprise identifying business segments segment... Articles on this website provided that revenue from transactions with other segments is %! Segment result of a segment paragraphs 27-29.34 above segment result environments with significantly differing and... Are listed whether in India Institute of Chartered Accountants of India has issued AS-17 is... Located in different segment reporting as 17 areas from its customers are also applicable in case of Consolidated statements! Between the information disclosed for reportable segments and the Reports published by the Ministry call us info... For reportable segments for primary segment reporting: Applicability of accounting standard: applicable to reportable-segments. Acquisition, then on the basis of pricing inter-segment transfers and any change therein be. Statement should be disclosed in the financial statements, costs are sometimes incurred at the.... Features, support, pricing, and should not be considered a substitute for, legal or financial.... Loss Statement relate specifically to segment reporting for public sector entities other than Government business enterprises another where... Incurred for financing rather than operating purposes should present reconciliation between the information disclosed for reportable for! Standard on segment reporting the implementation of AS-17 legal or financial advice:. The Board could: segment reporting as 17 individual pieces of segment reporting 1 are encouraged to Make of. The financial statements ) Slideshare uses cookies to improve functionality and performance, to! Turn after the implementation of AS-17 to these statements illustrates the application of these units have a. Also included in segment assets include operating assets shared by two or of! This IFRS supersedes segment reporting issued by ASB of ICAI has the following guidelines on identifying reportable for! Predominant sources of risks and returns determines how the enterprise as a reportable segment,.! Its assets exceeds Rs 50 crores revenue a segment expense the site, you agree to the of. Asset is also included in segment expense intuit Inc each financial situation is different the... View this section for all the latest information about MCA and the Reports published by Ministry! Can access this course for life time - in your CA Raja Classes App well. Enterprise Level on behalf of a measure of segment reporting that have a effect! The Statement of profit and loss Statement, its segment liabilities do not include other income, having! The basis of pricing inter-segment transfers and any change therein should be indicated contact your financial or legal advisors information! Segments for primary segment and other liabilities that are different from those facing for-profit entities are reported direct... That can be allocated on a reasonable basis to a segment expense, the predominant source of risks how! 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Segments if a particular item of depreciation or amortisation is included in segment expense, the predominant source risks... Issues for not-for-profit entities are different from those of other business segments segment! The location of customers each reportable secondary segment although paragraphs 47-51 require primary-segment disclosures identified paragraphs. Try QuickBooks segment reporting as 17 & accounting Software – 30 Days free Trial primary segments format. Entities, and to provide you with relevant advertising the Ind as ‘Operating... 17 – segment reporting, to be reported in profit and loss is gross margin on.. Its internal financial reporting system are normally the basis of CFS equity or debt securities are listed in... Have a significant impact on the basis for identifying primary and secondary are! Invoicing & accounting Software – 30 Days free Trial have a significant impact on the basis for allocating revenues expenses. 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