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AS-17
SEGMENT REPORTING
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Issuing
Authority:
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The
Institute of Chartered Accountants of India.
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Effective
from:
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Accounting
periods commencing on or after 1.4.2001
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| Applicable
to: |
Enterprises
whose equity or debt securities are listed on
a recognized stock exchange in India
Enterprises who are in the process of listing
their securities
Other
enterprises whose turnover for the accounting
period exceeds Rs.50 crores.
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Nature:
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Mandatory
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Scope
To be applied in presenting general purpose financial
statements. Also applicable in case of consolidated
financial statements.
Segment information should be prepared in conformity
with the accounting policies adopted for preparing and
presenting the financial statements of the enterprises
as a whole. To be complied fully and not selectively.
Basis
of segment reporting :
Enterprises
must report information along: Product and services
lines - Business Segment and along the geographical
lines - Geographical Segment One basis of segmentation
should be primary, the other being secondary.
Reportable
Segment
Business
segment or geographical segment identified for segment
information disclosure. Segments are organizational
units for which information is reported to the board
of directors and CEO for evaluating the units performance
and for allocation of resources.
Identify
Reportable Segments (Primary and Secondary)
- dentification
to be governed by dominant source and nature of risks
and returns
- Internal
Organization and Management Reporting may be referred
to as the basis except where
- Differences
in products/services or difference in geographical
areas affect risks and returns equally, primary
reporting by products/services and secondary reporting
by geographical areas is suggested.
- Neither
products or services nor geographical areas form
the basis of management reporting. In such a case,
management should determine whether risks &
returns are more related to products/services or
geographical areas. Such identification must be
consistent with the following:
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If some of the internally reported segments
meet the definitions as stated below - no further
segmentation is required.
- If
some of the internally reported segments do
not meet the definitions as stated below - management
should look to the next lower level of segmentation
to determine reportable segments which meet
the requisite definitions.
- If
next lower level of segmentation meets the definition,
following criteria may be used for identify segments.
- Revenues
from sale to external customers plus other segments
is 10% or more of total external and internal
revenue of all segments.
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Segment result is 10% or more of :-
Combined result of all segments in profit or
Combined result of all segments in loss, whichever
is more·
Segment assets are 10% or more of total assets
of all segments
- a
segment may be designated as a business or geographical
segment at management discretion, balance will be
reconciling items
- the
process should continue till external revenue attributable
to reportable segments is at least 75% of total
enterprise revenue
Business
Segment : Definition
A
business segment is a distinguishable component: That
engages in providing product or service and Which is
subject to risks and returns that differ.
Factors
determining related product and services:
- Nature
of product or services. Nature of production processes.
- Type
or class of customers for the products or services.
- Methods
used to distribute the products or provide the services.
- The
nature of regulatory environment for example banking,
insurance or public utilities, if applicable.
Geographical
segment : Definition
It
is a distinguishable component of an enterprise that
is engaged in providing products or services within
a particular economic
environment which is subject to risks and returns that
differ.
Geographical
segments may be identified by:
- Similarity
of economic and political conditions.
- Relationships
between operations in different geographical areas.
- Proximity
of operations.
- Special
risks associated with operations in a particular area.
- Exchange
control regulations.
- Underlying
currency risks.
Segment
Disclosures: Primary Segment
Revenue
(external and inter segment shown separately).
- Segment
results.
- Carrying
amount of segment assets.
- Carrying
amount of segment liabilities.
- Cost
to acquire property, plant, equipment, and intangibles.
- Depreciation
and amortization.
- Non-cash
expenses other than depreciation.
Presentation
of reconciliation between -
- Segment
revenue to enterprise revenue.
- Segment
results to enterprise results.
- Segment
assets to enterprise assets.
- Segment
liabilities to enterprise liabilities.
Segment
Disclosures : Secondary Segment
In case
of Geographical segment:
- Revenue
from external customers by geographical area
- Carrying
amount of segment assets by geographical location
of assets.
- Cost
of acquired property, plant, equipment, and intangibles
by geographical location of assets.
If location
of customers is different from location of assets:
- Revenue
from sales to external customers for each customerbased
geographical segment.
- Total
carrying cost of segment assets by geographical location
of assets.
- Cost
to acquire assets (both tangible and intangible )
by location of assets.
Segment Disclosures : Secondary Segment
In case
of Business Segment-
- Segment
revenue from external customers.
- Total
carrying amount of segment asset.
- Cost
of acquiring segment assets (tangible and intangible).
Other
Disclosures (for Primary as well as Secondary segments)
- When
majority of enterprises' revenue is from inter segment
sales.
- Basis
for determining prices for inter-segment sales.
- When
an enterprise operates in a single business or geographical
segment.
- Change
in basis for determining prices for inter-segment
sales.
- Change
in accounting principles employed for segment disclosure.
- Revision
in definitions of industry or geographic segment.
- Indicate
type of products and services included in each reported
segment.
- Indicate
the composition of each reported geographical segment.
Differences
between IAS, USGAAP & AS
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IAS
- 14
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FAS
- 131
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AS
- 17
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Public
entities. Report primary and secondary segment
formats based on risks and returns and internal
reporting structure.
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Public
entities. Reports based on internal operating
structure.
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Enterprises
whose equity or debt securities are listed on
a recognized stock exchange in India, in the process
of listing & entities having turnover Rs. 50 Crores.
Rest same as IAS - 14.
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Use
consolidated GAAP accounting policies.
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Use
internal financial reporting policies even if
accounting policies may differ from consolidated
GAAP.
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Use
accounting policies adopted for the enterprise
and also specific policies related to segment
reporting.
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Disclosures
for primary segment format includes sales, profits,
capex, assets and liabilities. For secondary segment
format, report sales, assets and capex.
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Similar
disclosures to IAS except liabilities and geographical
capex not required. Depreciation, amortization,
tax, interest and exceptional items required if
reported internally.
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Similar
disclosures to IAS except capex in primary as
well as in secondary segment formats.
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