segment reporting as 17

Factors that should be considered in determining whether products or services are related include: (a) The nature of the products or services; (b) The nature of the production processes; (c) The type or class of customers for the products or services; (d) The methods used to distribute the products or provide the services; and. If that measure is prepared on a basis other than the accounting policies adopted for the financial statements of the enterprise, the enterprise will include in its financial statements a clear description of the basis of measurement. Disclaimer 9. Paragraph 53—59 address several others segment disclosure matters. (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. IFRS 8 2. And the location of customers is different from the location of its assets. Appendix II to this Statement presents an illustration of the determination of reportable segments as per paragraphs 27-29.34. Information may be abridged and therefore incomplete. Such changes can have a significant impact on the segment information reported but will not change aggregate financial information reported for the enterprise. As per AS 17, Segment Reporting is useful for better understanding of the financial statements and taking decisions by the users. Not applicable to Level II and Level III enterprises in their entirely. Paragraphs 39-46 identify the disclosure requirements to be applied to each reportable segment based on primary reporting format of an enterprise. This Statement should be applied in presenting general purpose financial statements. 4. 45. 51. Segment assets are those operating assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis. 48. 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 … Segment assets do not include assets used for general enterprise or head-office purposes. Examples of segment assets include current assets that are used in the operating activities of the segment and tangible and intangible fixed assets. 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. 34. 25. Further, it is subject to risk and returns that are different from units operating in other economic environments. 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. For lectures included in the course, click / tap Course Contents. Disclosure of segment cash flow is, therefore, encouraged, though not required. 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 at the enterprise level that affect segment information are dealt with in accordance with AS 5. Provided that revenue from sales to external customers is 10% or more of entreprise revenue. Segment liabilities do not include income tax liabilities. 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. Please contact your financial or legal advisors for information specific to your situation. Segment liabilities do not include borrowings and other liabilities that are incurred for financing rather than operating purposes. The disclosure requirements in Paragraph 40—46 should be applicable to each reportable-segments based on primary reporting format of an enterprise. Purpose of this standard are 1.Better understand the performance of the enterprise. Basis for identifying primary and secondary segments Risks and returns are the main criteria for identifying primary and secondary segments. Segment Liabilities. If segment result includes interest expense then segment assets include related interest-bearing liabilities. 50 crores. 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. (ii) All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs 50 crores. The following is the text of Accounting Standard 17, ‘Segment Reporting’, issued by the Council of the Institute of Chartered Accountants of India. 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. 14. This approach of looking to organisational and management structure of an enterprise and its internal financial reporting system to identity’ the business and geographical segments of the enterprise for external reporting purposes is sometimes called the ‘management approach’, and the organisational components for which information is reported internally are sometimes called ‘operating segments’. The 10 per cent thresholds in this Statement arc not intended to be a guide for determining materiality for any aspect of financial reporting other than identifying reportable business and geographical segments. The reporting requirements for the primary and secondary segments are different. There is another case where the primary format of segment reporting is geographical segments based on location of customers. Segment result is segment revenue less segment expense. 40. A geographical segment may be a single country, a group of two or more countries, or a region within a country. A single business segments does not include products and services with significantly differing risks and returns. Note: It is clarified that individual housing loans will also form part of Retail Banking segment for the purpose of reporting under AS-17. Accounting standard 17 deals with segment reporting that was established to help better understand the performance risk and returns of an... Accounting Standard 17 (AS 17): Segment Reporting, Intuit launches QuickBooks Online Accountant in India For CA's, GST Exemption List For Services: A Detailed Guide, GST Invoice Guide: Components, Formats and Time to Issue, 8 Tips of Marketing For Accountants in India, 5 Ways For Accountants In Dealing With Difficult Customers, HSN Code: Understand HSN Code with GST Rate | HSN Full form, Partnership Firm Registration: All You Need To Know, Shops and Establishments Act – What the Law Says, entreprises with equity or debt securities listed in India and outside India, entreprises in the process of listing their equity or debt securities as acknowledged by board of directors, entreprises having turnover exceeding Rs. 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 India Institute of Chartered Accountants of India has issued AS-17 which is being reproduced for the reference of the students. AS 17 Segment Reporting Summary Notes. The factors in paragraph 5 for identifying business segments and geographical segments are not listed in any particular order. 54. It deals with the provisions pertaining to the reporting of segment information in order to meet the needs of the users of the financial statements. You can access this course for life time - in your CA Raja Classes App as well as Website in Desktop / Laptop. AS-17 Segment Reporting issued by ASB of ICAI has the following guidelines on identifying reportable segments: Guideline # 1. Segment assets include operating assets shared by two or more segments if a reasonable basis for allocation exists. Where the effect of such change is not ascertainable, wholly or in part, the fact should be indicated. 20. Similarly, to assess the impact of changes in the economic and political environment on the risks and returns of a geographical segment, it is important to know the composition of that geographical segment. 57. And the assets of the entreprise are located in different geographical areas from its customers. Organisational and management structure of an enterprise and its internal financial reporting system normally provide the best evidence of the predominant source of risks and returns of the enterprise for the purpose of its segment reporting. Changes in accounting policies adopted for segment reporting that have a material effect on segment information should be disclosed. Require the disclosures in Topic 280, Segment Reporting, to be reported in a … Therefore, the organisational structure of an enterprise and its internal financial reporting system are normally the basis for identifying its segments. 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. Primary and Secondary Segment Reporting Formats:. Segment assets are determined after deducting related allowances/ provisions that are reported as direct offsets in the balance sheet of the enterprise. There can be two possibilities: The entreprise can consider business segments as its primary segment reporting format and geographic segments as its secondary format. A segment identified as a reportable segment in the immediately preceding period because it satisfied the relevant 10 per cent thresholds should continue to be a reportable segment for the current period notwithstanding that its revenue, result, and assets all no longer meet the 10 per cent thresholds. 13. For example, an asset is included in segment assets if, and only if, the related depreciation or amortisation is included in segment expense. Segment reporting is intended to give information to investors and creditors regarding the financial results and position of the most important operating units of a company, which they can use as the basis for decisions related to the company. (e) If applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities. As- 17 Segment Reporting The standard prescribe the procedure and manner of reporting of financial performance of various products and service and geographical performance instead of a company as a whole for better understanding of the financial statement. 50. ACCOUNTING STANDARD 17 (Segment Reporting) Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Reportable Segment is a Business Segment or Geographical Segment for which segment information is required to be disclosed. 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. vi Deloitte A Roadmap to Segment Reporting (2020) 2.3.2.4 Budgeting Process 17 2.3.2.5 Compensation Structure 18 2.4 Discrete Financial Information 18 2.4.1 Revenue Information Provided to … If Financial report contains both, then on the basis of CFS. Enterprise revenue is revenue from sales to external customers as reported in the statement of profit and loss. AS-17: Segment Reporting: Applicability of Accounting Standard: Applicable to Level I Enterprises. 1. A business segment or a geographical segment which is not a reportable segment as per paragraph 27, may be designated as a reportable segment despite its size at the discretion of the management of the enterprise. Therefore, jointly used assets and liabilities are allocated to segments if, and only if, their related revenues and expenses also are allocated to those segments. (i) The portion of enterprise revenue that is directly attributable to a segment. 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. (b) Its segment result, whether profit or loss, is 10 per cent or more of: (i) The combined result of all segments in profit, or. 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. Accounting Standard 5, ‘Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies’ requires that “when items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately”. As 17 - Segment Reporting - Free download as Powerpoint Presentation (.ppt / .pptx), PDF File (.pdf), Text File (.txt) or view presentation slides online. If segment assets have been revalued subsequent to acquisition, then the measurement of segment assets reflects those revaluations. 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. Relevant allowances and provisions are deducted before balance sheet reporting. 30. 23. If a segment is identified as a reportable segment in the current period because it satisfies the relevant 10 per cent thresholds, preceding-period segment data that is presented for comparative purpose should, unless it is impracticable to do so, be restated to reflect the newly reportable segment as a separate segment, even if that segment did not satisfy the 10 per cent thresholds in the preceding period. 10. 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. 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. 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. In such a case entreprise should also report the following segment information for each asset based geographical segment provided revenue from sales to external customers or segment assets are 10% or more of total entreprise amounts: © 2020 Copyright © Intuit India Software Solutions Pvt. (c) If such an internally reported lower-level segment meets the definition of business segments or geographical segment based on the factors in paragraph 5, the criteria in paragraph 27 for identifying reportable segments should be applied to that segment. This Standard comes into effect in respect of accounting periods commencing on or after 1.4.2001 and is mandatory in nature, from that … 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 enterprises produces and the different geographical areas. 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. 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. 35. For a clearer understanding of the performances of segments. AASB 114 does not apply to not-for- Prohibited Content 3. https://quickbooks.intuit.com/in/resources/accounting-taxes/accounting-standard-17/. If you continue browsing the site, you agree to the use of cookies on this website. Some changes in accounting policies relate specifically to segment reporting. Segment information should be prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the enterprise as a whole. If the risks and returns of an enterprise are affected predominantly by differences in the products and services it produces, its primary format for reporting segment information should be business segments, with secondary information reported geographical. 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. 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