Entity-Wide Disclosures and Major Customers under Ind AS 108

Understand Entity-Wide Disclosures and Major Customers

Key rules to remember

Applicability (para 31)

Paras 32–34 apply to all entities, including single-segment entities

Give the information only if it is not already provided in the reportable segment information.

Products and services (para 32)

Report external-customer revenue for each product/service or group of similar products/services

If information is unavailable and the cost to develop it would be excessive, disclose that fact instead.

Geographical revenue (para 33(a))

External-customer revenue: (i) country of domicile (ii) all foreign countries in total; show an individual foreign country separately if material

Also disclose the basis for attributing revenue to individual countries.

Geographical non-current assets (para 33(b))

Non-current assets located in (i) country of domicile (ii) all foreign countries in total; show a material foreign country separately

Exclude financial instruments, deferred tax assets, post-employment benefit assets and rights arising under insurance contracts.

Major customer test (para 34)

Revenue from a single external customer ÷ entity revenue ≥ 10%

Disclose the fact, the total revenue from each such customer, and the segment or segments reporting that revenue. Identity of the customer and segment-wise amounts need not be disclosed.

Single customer (para 34)

Entities under common control = one customer

For governments and entities under their control, judgement is needed, considering the extent of economic integration.

How to solve Entity-Wide Disclosures and Major Customers questions

1. 1Check whether the information is already given in the reportable segment disclosures. If yes, no separate entity-wide disclosure is needed for it.
2. 2For products and services, group revenue from external customers by product or similar group. Ignore inter-segment revenue.
3. 3For geography, split external revenue into domicile and foreign. Show a foreign country separately if material, and state the basis of attribution.
4. 4For non-current assets, list those by location and remove financial instruments, deferred tax assets, post-employment benefit assets and insurance rights.
5. 5For major customers, first combine customers under common control into one. Then divide each customer's revenue by total entity revenue.
6. 6Disclose every customer at 10% or more: the fact, the total revenue from it, and the segments reporting it. Do not name the customer unless asked.
7. 7State any unavailability exception with the fact that cost would be excessive. Close with a clear conclusion.

Quickest way: Three-line check for major customers

Common mistakes in Entity-Wide Disclosures and Major Customers

• Thinking single-segment entities are exempt from entity-wide disclosures

  Students link all of Ind AS 108 to multiple segments.

  Fix: Remember para 31: paras 32–34 apply to all entities, including those with a single reportable segment.

• Treating group companies as separate customers

  Students look at invoices and names, not control.

  Fix: Add up customers known to be under common control and treat them as one customer before applying the 10% test.

• Disclosing the customer's name and segment-wise amounts as mandatory

  Students confuse 'disclose the fact' with full identification.

  Fix: Disclose the fact, the total revenue and the segments reporting it. The identity and the amount per segment need not be disclosed.

• Including financial instruments and deferred tax assets in geographical non-current assets

  Students take all non-current assets from the balance sheet.

  Fix: Exclude financial instruments, deferred tax assets, post-employment benefit assets and rights arising under insurance contracts.

• Using inter-segment revenue in the 10% test or product revenue

  Students take total segment revenue.

  Fix: Use revenue from external customers. The 10% test compares one external customer's revenue with the entity's revenue.

• Repeating information already given in segment disclosures

  Students think every item is always required separately.

  Fix: Para 31 requires paras 32–34 information only if it is not provided as part of reportable segment information.

Worked examples