Advanced Accounting · AS 17 Segment Reporting

AS 17 Segment Disclosures: Primary and Secondary Formats

Updated 4 October 2026 · Fact-checked

AS 17 requires an enterprise to disclose segment information in a primary format and a secondary format. Primary format needs full detail: revenue, result, assets, liabilities, capex, depreciation and non-cash expenses. Secondary format needs less. You must also reconcile segment totals to the enterprise financial statements.

Understand Segment Disclosures: Primary and Secondary Formats

AS 17 asks you to break the enterprise's numbers into segments so a reader can see where profit and risk come from. Before disclosure, you must pick the primary segment reporting format and the secondary segment reporting format. Each is either business segments or geographical segments.

The choice depends on the dominant source and nature of the enterprise's risks and returns. If risks and returns are affected mainly by the products and services, the primary format is business segments and the secondary is geographical. If they are affected mainly by operating in different countries or areas, the primary is geographical and the secondary is business. If the internal organisational and management structure and the internal financial reporting system are based on one of the two, that is normally the primary format.

The primary format gets the heavy disclosure. The secondary format gets a lighter set. Think of the primary as the full picture and the secondary as a second view with fewer items.

Finally, segment totals will not match the financial statements by themselves. Some items are not allocable to any segment, such as corporate expenses, and there may be eliminations of inter-segment items. So AS 17 requires a reconciliation between segment information and the enterprise's financial statements. This is what examiners love to test.

Key rules to remember

Primary format disclosures (each reportable segment): Segment revenue (external and inter-segment separately) + Segment result + Segment assets + Segment liabilities + Capital expenditure + Depreciation/amortisation + Other significant non-cash expenses; These are the main items to disclose for each reportable segment: revenue, result, assets, liabilities, capex, depreciation/amortisation and other significant non-cash expenses. Also disclose the share of profit or loss and investment in associates or joint ventures where substantially all operations are in a single segment, the basis of pricing inter-segment transfers, any change in segment accounting policies, and the reconciliation to the financial statements.
Secondary format disclosures: business primary: Segment revenue from external customers by geographical area (based on location of customers) + Carrying amount of segment assets by location of assets + Capital expenditure by location of assets; Each item has its own 10% test (para 38). Disclose external revenue by geographical area for each area whose external revenue is 10% or more of enterprise revenue. Disclose segment assets and capital expenditure by location of assets for each area whose segment assets are 10% or more of total assets. There is no single combined test for all three items.
Secondary format disclosures: geographical primary: Segment revenue from external customers by business segment + Carrying amount of segment assets by business segment + Capital expenditure by business segment; Para 39 sets one test for the business segment. Disclose all three items for each business segment whose external revenue is 10% or more of enterprise revenue, or whose segment assets are 10% or more of total assets. Keep this distinct from the geographical case above, where each item has its own test.
Reconciliation: Segment revenue → Enterprise revenue; Total segment result ± unallocable items (corporate expenses, interest expense, interest/dividend income, etc.) = Profit before tax (profit from ordinary activities); Profit before tax − tax = Net profit; Segment assets → Enterprise assets; Segment liabilities → Enterprise liabilities; Deduct unallocable expenses and add unallocated income such as interest and dividend income. Tax is deducted only to move from profit before tax to net profit. Show eliminations and unallocated items as separate reconciling lines.
Segment result: Segment result = Segment revenue − Segment expense; Excludes interest and dividend income, interest expense, gains or losses on sale of investments, income tax and general corporate expense, unless the segment is a financial one.

How to solve Segment Disclosures: Primary and Secondary Formats questions

Use this method for any AS 17 disclosure or reconciliation question.

1Decide the primary format. Read the question for clues on dominant risks and returns, or the management structure. State it in one line.
2Identify the reportable segments using the 10% tests, and note whether the remaining segments are small enough to be grouped as 'others'.
3Draw the primary format table with one column per segment, plus columns for unallocated or eliminations and the total.
4Fill in the data: external revenue, inter-segment revenue, total revenue, segment result, assets, liabilities, capex, depreciation and other non-cash expenses.
5Compute the segment result as revenue less expense. Keep out interest, tax and corporate costs, which are unallocable.
6Prepare the secondary format with fewer items, as listed for the other format. Apply the 10% tests as stated in paras 38 and 39: item by item for geographical areas, and the revenue-or-assets test for business segments.
7Reconcile: segment totals plus or minus unallocated items and eliminations should equal the enterprise figures. Check that the totals tally.
8Close with brief notes on the basis of pricing inter-segment transfers and any change in segment accounting policies.

Quickest way: Table-first approach for MCQs and written answers

When to use it: When time is short and the question gives numbers across segments.

For MCQs, first ask: is it the primary or secondary format? Primary needs revenue, result, assets, liabilities, capex, depreciation and non-cash expenses; secondary needs a lighter set (external revenue, segment assets, capex). This removes many options.
Remember that secondary-format disclosure depends on 10% tests, not on the full primary list. Business primary, geographical secondary: each item has its own test (external revenue by area is tested on revenue; segment assets and capex by location are tested on segment assets). Geographical primary, business secondary: a business segment is covered if its external revenue is 10% or more of enterprise revenue or its segment assets are 10% or more of total assets, and then all three items are given.
For reconciliation sums, write: Total of segments − inter-segment eliminations ± unallocated = enterprise figure. Do the arithmetic once and check against the given total.
For written answers, draw the table first. Neat columns and a labelled reconciliation earn step marks even if one figure is wrong.
Add one line naming the primary format and the reason. Examiners award a mark for the basis.

Common mistakes in Segment Disclosures: Primary and Secondary Formats

Listing the same disclosures for primary and secondary formats
Both are called 'segment formats', so students assume equal detail.
Fix: Primary needs revenue, result, assets, liabilities, capex, depreciation/amortisation and other significant non-cash expenses, plus items such as associates' share of profit, pricing basis for inter-segment transfers, policy changes and the reconciliation. Secondary needs a lighter set: external revenue, segment assets and capex, for areas or segments meeting the 10% thresholds.
Including interest, tax or corporate expenses in the segment result
Students take total profit and split it by segment.
Fix: Segment result is segment revenue less segment expense. Keep unallocable items outside and show them in the reconciliation.
Showing only total segment revenue and omitting the inter-segment split
It looks like extra work.
Fix: Show external and inter-segment revenue separately. Eliminate inter-segment revenue in the reconciliation to reach enterprise revenue.
Skipping the reconciliation or doing it only for profit
Students think the table is complete once the segments are filled.
Fix: Reconcile revenue, result, assets and liabilities each to the financial statements.
Choosing the primary format by size alone
Students pick business segments by default.
Fix: Choose it based on the dominant source and nature of risks and returns, and the internal management structure.

Worked examples

Example 1

An enterprise has two reportable business segments. Segment A: external revenue ₹6,00,000, inter-segment revenue ₹1,00,000, segment expenses ₹5,20,000. Segment B: external revenue ₹4,00,000, inter-segment revenue ₹0, segment expenses ₹3,50,000. Unallocable corporate expenses are ₹30,000 and interest expense is ₹20,000. Prepare the reconciliation of revenue and profit before tax.

Show the solution

Segment A total revenue = 6,00,000 + 1,00,000 = ₹7,00,000. Segment A result = 7,00,000 − 5,20,000 = ₹1,80,000.
Segment B total revenue = ₹4,00,000. Segment B result = 4,00,000 − 3,50,000 = ₹50,000.
Total segment revenue = 7,00,000 + 4,00,000 = ₹11,00,000. Less inter-segment revenue eliminated ₹1,00,000 gives enterprise revenue ₹10,00,000.
Total segment result = 1,80,000 + 50,000 = ₹2,30,000.
Less unallocable corporate expenses ₹30,000 and interest expense ₹20,000 = ₹50,000. There is no unallocated income in this question. Tax is not deducted here, because the target is profit before tax.
Profit before tax (profit from ordinary activities) = 2,30,000 − 50,000 = ₹1,80,000.

Answer: Enterprise revenue is ₹10,00,000 and profit before tax is ₹1,80,000.

Example 2

A company's primary format is business segments. List the disclosures it must give in the secondary format and explain when a geographical area is disclosed.

Show the solution

Since business segments are primary, the secondary format is geographical segments.
The disclosures needed are: segment revenue from external customers by geographical area based on location of customers; carrying amount of segment assets by location of assets; and capital expenditure by location of assets.
Each item has its own 10% test. External revenue is disclosed for each geographical area whose external revenue is 10% or more of enterprise revenue.
Segment assets and capital expenditure are disclosed for each geographical area whose segment assets are 10% or more of total assets.
No further detail, such as segment result or liabilities, is required for the secondary format.

Answer: The secondary format requires external revenue by location of customers, and segment assets and capital expenditure by location of assets. External revenue is given for each area with external revenue of 10% or more of enterprise revenue. Segment assets and capital expenditure are given for each area with segment assets of 10% or more of total assets.

Exam tips

Learn the primary heads by heart (revenue, result, assets, liabilities, capex, depreciation/amortisation, other significant non-cash expenses), and add the extras: associates' share of profit, pricing basis for inter-segment transfers, policy changes and the reconciliation. Many theory questions ask for this.
Practise one reconciliation per week. Numerical questions on AS 17 usually pair a segment table with a reconciliation to the enterprise totals.
In MCQs, test the options against the primary versus secondary difference before doing any arithmetic.
State the primary format and your reason in the first line of any written answer. It costs ten seconds and earns marks.

Practice questions from AS 17 Segment Reporting

Segment Disclosures: Primary and Secondary Formats in other exams

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

Segment Disclosures: Primary and Secondary Formats: frequently asked questions

What is the difference between primary and secondary segment format in AS 17?

The primary format is the main basis of segmentation and needs detailed disclosure: revenue, result, assets, liabilities, capex, depreciation and non-cash expenses. The secondary format is the other basis and needs a lighter set: external revenue, segment assets and capex. Which one is primary depends on the dominant source of risks and returns.

Why is reconciliation required under AS 17?

Segment figures exclude unallocable items and include inter-segment amounts. The reconciliation links segment totals to revenue, profit, assets and liabilities in the enterprise financial statements so readers can trust the data.

Are inter-segment revenues included in enterprise revenue?

No. Inter-segment revenues appear in segment revenue but are eliminated on consolidation or in the reconciliation. Enterprise revenue includes only external revenue.

Do I need to memorise the secondary format for both cases?

Yes, but it is simple. The secondary items are external revenue, segment assets and capital expenditure. Only the basis and the 10% tests change. When business is primary, each item has its own test: revenue by area is tested on revenue, and assets and capex by location are tested on segment assets. When geographical is primary, a business segment is covered if its external revenue is 10% or more of enterprise revenue or its segment assets are 10% or more of total assets, and then all three items are given.