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Financial Reporting · Ind AS 108 Operating Segments

Ind AS 108: Segment Measurement and Disclosure Requirements

Updated 5 October 2026 · Fact-checked

Ind AS 108 requires you to report each reportable segment's profit or loss, and total assets and liabilities if regularly given to the CODM, using the measures the CODM uses. You then reconcile segment totals to entity revenue, profit before tax, assets and liabilities, and explain the measurement bases and reconciling items.

Understand Segment Measurement and Disclosure Requirements

Ind AS 108 follows the management approach. You do not report segments on a measure you choose. You report the amounts the chief operating decision maker (CODM) actually uses to allocate resources and assess performance. The CODM is a function, not always one person. It may be a managing director, a committee or the board.

The standard asks for a measure of profit or loss for every reportable segment. It also asks for total assets and total liabilities of each segment, but only if those amounts are regularly provided to the CODM. Other items are disclosed only if they are included in the segment profit or loss measure reviewed by the CODM, or are otherwise regularly given to the CODM. Examples are external revenue, inter-segment revenue, interest income and expense, depreciation and amortisation, material items of income and expense, share of profit of associates and joint ventures, income tax expense, and material non-cash items. Likewise, you disclose the investment in associates and joint ventures and the additions to non-current assets if the amounts are included in the measure of segment assets reviewed by the CODM or are otherwise regularly provided to the CODM.

The measure need not follow Ind AS. If the CODM reviews a figure built on management accounting rules, you report that figure. The cost is that you must explain how it was measured. You disclose the basis of accounting for inter-segment transactions, differences between segment measures and entity amounts, changes in measurement methods, and any asymmetrical allocations, such as depreciation charged to a segment without allocating the related asset.

Because segment numbers can differ from the financial statements, you must give reconciliations. These cover total segment revenues to entity revenue, total segment profit or loss to entity profit or loss before tax expense and discontinued operations (unless items such as income tax are allocated to segments), total segment assets to entity assets, total segment liabilities to entity liabilities (if reported), and every other material item to the entity amount. All material reconciling items are shown separately, such as unallocated corporate costs or eliminations.

If you change the structure of internal reporting so that reportable segments change, you restate earlier periods, unless the information is not available and the cost to develop it would be excessive. Disclosure of this fact is required.

Key rules to remember

Segment profit or loss
Reported measure = the measure used by the CODM (not necessarily Ind AS profit)
Disclose it for each reportable segment. Explain how it is measured.
Segment assets and liabilities
Disclose total assets and total liabilities only if regularly provided to the CODM
Also disclose the amount of investment in associates and JVs and additions to non-current assets if included in the measure of segment assets reviewed by the CODM or otherwise regularly provided to the CODM.
Revenue reconciliation
Entity revenue = Total reportable segment revenue + Gross revenue of other segments − All inter-segment revenue (including that of other segments) ± Other reconciling items
Add other segments' revenue gross, including any inter-segment sales in it. Then eliminate all inter-segment revenue once, so nothing is deducted twice or missed. Show each material reconciling item separately.
Profit reconciliation
Entity profit before tax = Total segment profit + Other segments' profit − Unallocated corporate expenses ± Eliminations ± Other reconciling items
Reconcile to the entity's profit or loss before tax expense and discontinued operations, unless the entity allocates items such as income tax to segments, in which case reconcile after those items.
Asset and liability reconciliation
Entity assets = Total segment assets + Unallocated assets − Eliminations; Entity liabilities likewise
Unallocated items typically include corporate assets, deferred tax and tax balances.
Restatement rule
Change in reportable segments → restate prior-period segment data unless information is unavailable and excessive in cost
If you do not restate comparatives, you disclose, in the year of change, segment information for the current period under both the old and the new basis of segmentation, unless the information is unavailable and the cost to develop it would be excessive.

How to solve Segment Measurement and Disclosure Requirements questions

Use this order for any question on segment measurement, disclosure or reconciliation.

  1. 1Identify what the CODM regularly reviews: profit measure, assets, liabilities and other items. This decides what you must disclose.
  2. 2Pick out the reportable segments and treat any remaining operating segments as 'all other segments'.
  3. 3Compute each segment's revenue (external and inter-segment) and profit or loss using the CODM's measure, not your own preferred basis.
  4. 4Include assets and liabilities only if they are reported to the CODM. Note items allocated to segments and items left unallocated.
  5. 5List reconciling items: inter-segment eliminations, unallocated corporate costs, unallocated assets and liabilities, and measurement differences.
  6. 6Build the reconciliation from segment totals to entity revenue, profit before tax, assets and liabilities, and check each ties to the financial statements.
  7. 7Add the narrative disclosures: basis of inter-segment pricing, measurement differences, changes in method, and asymmetrical allocations.

Quickest way: Total-up and tie-out

When to use it: Use when a question gives segment figures and asks for the reconciliation or the reportable disclosure under time pressure.

  1. Write segment totals in one line: revenue, profit, assets, liabilities.
  2. Add 'other segments' next.
  3. Subtract inter-segment items from revenue and from assets or liabilities where they exist.
  4. Deduct unallocated costs and add unallocated assets and liabilities.
  5. Check the result equals the entity figure given. If it does not, you missed a reconciling item.
  6. Write one line each on the CODM basis and the pricing of inter-segment transfers.

Common mistakes in Segment Measurement and Disclosure Requirements

  • Measuring segment profit using Ind AS figures when the CODM reviews a different measure.

    Students assume segment results must match the statement of profit and loss.

    Fix: Report the CODM's measure and reconcile the difference to the entity amount.

  • Disclosing segment assets and liabilities in all cases.

    The rule for profit or loss is mandatory, so students extend it to everything.

    Fix: Disclose total assets and total liabilities only if regularly provided to the CODM.

  • Forgetting inter-segment eliminations in the revenue reconciliation.

    Segment revenue is shown gross of inter-segment sales and students add it directly.

    Fix: Deduct inter-segment revenue to arrive at entity revenue.

  • Leaving out unallocated corporate costs and assets from the reconciliation.

    These items are not part of any segment, so they are easy to overlook.

    Fix: List them as separate reconciling items so that the totals tie to the financial statements.

  • Not explaining measurement basis, inter-segment pricing or asymmetrical allocations.

    Students focus on numbers and treat narrative disclosure as optional.

    Fix: Add a short note on each, since the standard requires them.

  • Not restating prior-period segment data after segments change.

    Students think a change in structure applies only going forward.

    Fix: Restate comparatives unless the information is unavailable and excessive in cost, and disclose this.

Worked examples

Example 1

Alpha Ltd has two reportable segments, A and B. Segment revenue (including inter-segment sales) is A ₹80,00,000 (of which inter-segment ₹5,00,000) and B ₹60,00,000 (of which inter-segment ₹3,00,000). Other operating segments' gross revenue is ₹7,00,000, all of it external, with no inter-segment sales. The CODM reviews segment profit: A ₹12,00,000 and B ₹9,00,000. These segment profits include inter-segment profit of ₹50,000 that is not realised outside the entity. Other segments' profit is ₹1,00,000. Unallocated corporate expenses are ₹4,00,000. Reconcile to entity revenue and profit before tax.

Show the solution
  1. Total segment revenue including inter-segment = 80,00,000 + 60,00,000 = ₹1,40,00,000.
  2. Add other segments' gross revenue (all external here): 1,40,00,000 + 7,00,000 = ₹1,47,00,000.
  3. Eliminate all inter-segment revenue: 5,00,000 + 3,00,000 = ₹8,00,000. Other segments have none to eliminate. Entity revenue = 1,47,00,000 − 8,00,000 = ₹1,39,00,000.
  4. Total segment profit = 12,00,000 + 9,00,000 = ₹21,00,000.
  5. Add other segments' profit: 21,00,000 + 1,00,000 = ₹22,00,000.
  6. Deduct unallocated corporate expenses: 22,00,000 − 4,00,000 = ₹18,00,000.
  7. The segment profits include inter-segment profit of ₹50,000, so deduct it in the reconciliation: 18,00,000 − 50,000 = ₹17,50,000.

Answer: Entity revenue is ₹1,39,00,000 and profit before tax is ₹17,50,000. Each reconciling item should be shown separately.

Example 2

Beta Ltd reports to its CODM only segment revenue, segment profit and segment assets. Segment liabilities are not provided to the CODM. Total segment assets are ₹95,00,000. Corporate assets not allocated are ₹12,00,000 and deferred tax assets are ₹3,00,000. Inter-segment receivables of ₹2,00,000 are included in segment assets and eliminated on consolidation. The entity's balance sheet shows total assets of ₹1,08,00,000 and total liabilities of ₹40,00,000. Advise what must be disclosed for assets and liabilities and prepare the asset reconciliation to entity total assets.

Show the solution
  1. Segment liabilities need not be disclosed because they are not regularly provided to the CODM.
  2. Segment assets must be disclosed and reconciled to entity assets.
  3. Start with total segment assets: ₹95,00,000.
  4. Deduct inter-segment receivables eliminated: 95,00,000 − 2,00,000 = ₹93,00,000.
  5. Add unallocated corporate assets: 93,00,000 + 12,00,000 = ₹1,05,00,000.
  6. Add deferred tax assets: 1,05,00,000 + 3,00,000 = ₹1,08,00,000.
  7. Compare with the balance sheet total assets of ₹1,08,00,000. The two agree, so no reconciling item is missing.

Answer: The reconciled total of ₹1,08,00,000 ties to the balance sheet total assets of ₹1,08,00,000. No segment liability disclosure is required, since liabilities are not reported to the CODM. The entity liabilities of ₹40,00,000 are therefore not reconciled to segments.

Exam tips

  • Start every answer with the CODM test. It decides what you disclose and which measure you use.
  • In reconciliation questions, show each reconciling item on its own line and total to the entity figure. Marks are given for the items.
  • In MCQs, watch for the words 'regularly provided to the CODM'. They separate mandatory from conditional disclosure.
  • Add a one-line note on measurement basis and inter-segment pricing in written answers. It is often missed.
  • Check that your reconciliation ties to the given entity total before finalising.

Practice questions from Ind AS 108 Operating Segments

Segment Measurement and Disclosure Requirements in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Segment Measurement and Disclosure Requirements: frequently asked questions

Must segment profit follow Ind AS measurement?

No. You report the measure the CODM uses, even if it is based on management accounting. You then explain how it is measured and reconcile it to the entity amount.

When must segment assets and liabilities be reported?

Only when those amounts are regularly provided to the CODM. A profit or loss measure is required for each reportable segment in all cases.

What must be reconciled under Ind AS 108?

You reconcile total segment revenue, profit or loss, assets and liabilities (if reported), and other material items to the entity's amounts. Material reconciling items are shown separately.

What happens if segment structure changes?

You restate the earlier periods' segment data, unless the information is unavailable and the cost to develop it would be excessive. If you do not restate comparatives, you disclose, in the year of change, segment information for the current period under both the old and the new basis of segmentation, unless the information is unavailable and the cost to develop it would be excessive.