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Corporate Financial Reporting · Operating Segments (Ind AS 108)

Quantitative Thresholds for Reportable Segments under Ind AS 108

Updated 11 October 2026 · Fact-checked

Under Ind AS 108, an operating segment is reportable if its revenue, absolute profit or loss, or assets is 10% or more of the combined total of all segments. Then check that reportable segments' external revenue is at least 75% of entity revenue. If not, add more segments until it is.

Understand Quantitative Thresholds for Reportable Segments

Once you have identified your operating segments, you must decide which ones to report separately. Ind AS 108 uses size tests for this. A segment that is large enough on any one measure must be reported on its own.

There are three 10% tests, in paragraph 13. They cover revenue, profit or loss, and assets. A segment needs to pass only one of them. It does not need to pass all three.

The revenue test uses total segment revenue, both external sales and intersegment sales or transfers. The denominator is the combined revenue, internal and external, of all operating segments. The profit test uses the absolute amount of the segment's profit or loss. It compares this with the greater of two figures: the combined profit of all segments that did not report a loss, and the combined loss of all segments that reported a loss. The asset test compares the segment's assets with the combined assets of all operating segments.

Next comes the 75% test in paragraph 15. Add up the external revenue of the reportable segments. If it is less than 75% of the entity's revenue, you must identify additional operating segments as reportable, even if they fail the 10% tests, until at least 75% is covered. Here the base is entity revenue, not combined segment revenue.

A segment that fails every test may still be reported if management believes the information is useful to users (paragraph 13). Small segments may also be combined with other small segments only if they have similar economic characteristics and share a majority of the aggregation criteria (paragraph 14). Whatever is left is shown as 'all other segments' (paragraph 16).

Key rules to remember

Revenue test (para 13(a))
Segment revenue (external + intersegment) ≥ 10% × combined revenue of all operating segments (external + internal)
Both sides include intersegment revenue.
Profit or loss test (para 13(b))
|Segment profit or loss| ≥ 10% × greater of (combined profit of profit-making segments, combined loss of loss-making segments in absolute amount)
Use absolute values. Compute both totals and pick the larger.
Asset test (para 13(c))
Segment assets ≥ 10% × combined assets of all operating segments
Passing any one of the three tests makes the segment reportable.
75% test (para 15)
Total external revenue of reportable segments ≥ 75% × entity revenue
If less, add more segments until at least 75% is reached. Para 15 allows this even if they fail para 13.
Other segments (paras 13, 14, 16)
Below-threshold segments: may be reported if management finds them useful; may be combined only with similar small segments; the rest go to 'all other segments'
Describe the sources of revenue in 'all other segments'.

How to solve Quantitative Thresholds for Reportable Segments questions

Use the same order for every numerical on reportable segments. Show each test in a small table so the examiner can award marks for each step.

  1. 1List each operating segment with total revenue (external plus intersegment), external revenue, profit or loss, and assets.
  2. 2Total the revenue and assets of all segments. Revenue total includes intersegment sales.
  3. 3For the profit test, total the profits of profit-making segments and total the losses (as positive numbers) of loss-making segments. Take the greater figure as the base.
  4. 4Compute 10% of each of the three bases.
  5. 5Compare each segment with the three limits. Mark it reportable if it meets or exceeds any one of them.
  6. 6Add the external revenue of the reportable segments and compare with 75% of entity revenue.
  7. 7If external revenue is short of 75%, add the next largest segment or segments until the test is met, and state that you applied paragraph 15.
  8. 8Write the conclusion: reportable segments, the segments combined or shown under 'all other segments', and any management-judgement segment.

Quickest way: Three limits, one tick table

When to use it: Use this for MCQs and for the first part of any numerical with five or more segments.

  1. Compute the three limits first: 10% of total revenue, 10% of the larger profit/loss base, 10% of total assets.
  2. Scan each segment against the limits and tick any one that is met. Stop checking that segment after the first tick.
  3. Sum the external revenue of ticked segments and compare with 75% of entity revenue.
  4. If short, add the largest unticked segment by external revenue and recheck.

Common mistakes in Quantitative Thresholds for Reportable Segments

  • Using only external revenue in the 10% revenue test.

    Students mix up the 10% test with the 75% test, which uses external revenue.

    Fix: For the 10% revenue test, use revenue including intersegment sales on both sides. Keep external revenue for the 75% test.

  • Taking total net profit of all segments as the profit-test base.

    It looks like the obvious total.

    Fix: Compute combined profit of profit-making segments and combined loss of loss-making segments separately. Use the greater absolute amount.

  • Treating a loss-making segment as failing the profit test because its profit is negative.

    Students forget the test uses the absolute amount.

    Fix: Ignore the sign. A large loss can make the segment reportable.

  • Requiring a segment to pass all three 10% tests.

    Confusion with other 'and' conditions.

    Fix: The text says 'any of the following'. One test is enough.

  • Using combined segment revenue as the base for the 75% test.

    Students reuse the same total from the 10% test.

    Fix: Use the entity's revenue, as paragraph 15 states, and compare it with the external revenue of reportable segments.

  • Stopping after the 10% tests without checking 75%.

    The 75% test is seen as optional.

    Fix: Always do the 75% check. If it fails, add segments until it is met.

Worked examples

Example 1

Axis Foods Ltd has five operating segments. Figures in ₹ lakh: A: external revenue 400, intersegment 100, profit 60, assets 500. B: external 300, intersegment 50, profit 40, assets 350. C: external 120, intersegment 30, loss (20), assets 150. D: external 100, intersegment 10, profit 10, assets 100. E: external 80, intersegment 10, loss (10), assets 50. Entity revenue is ₹1,000 lakh. Identify the reportable segments.

Show the solution
  1. Total revenue of all segments: A 500, B 350, C 150, D 110, E 90. Sum = 1,200. 10% = 120.
  2. Profit base: profits are 60 + 40 + 10 = 110. Losses are 20 + 10 = 30. Greater = 110. 10% = 11.
  3. Total assets: 500 + 350 + 150 + 100 + 50 = 1,150. 10% = 115.
  4. A: revenue 500 ≥ 120, reportable. B: revenue 350 ≥ 120, reportable.
  5. C: revenue 150 ≥ 120, reportable. Its absolute loss 20 ≥ 11 and assets 150 ≥ 115 also pass.
  6. D: revenue 110 < 120. Profit 10 < 11. Assets 100 < 115. Fails all tests.
  7. E: revenue 90 < 120. Absolute loss 10 < 11. Assets 50 < 115. Fails all tests.
  8. 75% test: external revenue of A, B, C = 400 + 300 + 120 = 820. 75% of 1,000 = 750. 820 ≥ 750, so the test is met.

Answer: A, B and C are reportable. D and E fall below every threshold and are shown under 'all other segments' (or may be reported if management thinks the information useful). The 75% test is met with 820 against the required 750.

Example 2

Kaveri Industries has four operating segments. Figures in ₹ crore: P: external revenue 300, intersegment 0, profit 30, assets 400. Q: external 200, intersegment 0, profit 15, assets 250. R: external 120, intersegment 0, profit 5, assets 150. S: external 80, intersegment 0, loss (2), assets 100. Entity revenue is ₹700 crore. Which segments must be reported?

Show the solution
  1. Total revenue = 300 + 200 + 120 + 80 = 700. 10% = 70.
  2. Profit base: profits 30 + 15 + 5 = 50. Loss = 2. Greater = 50. 10% = 5.
  3. Total assets = 400 + 250 + 150 + 100 = 900. 10% = 90.
  4. P passes all three. Q passes all three.
  5. R: revenue 120 ≥ 70, reportable.
  6. S: revenue 80 ≥ 70, reportable. Also assets 100 ≥ 90.
  7. All four segments are reportable, so external revenue covered = 700, which is 100% of entity revenue.
  8. 75% test: 700 ≥ 525, met.

Answer: All four segments P, Q, R and S are reportable, and the 75% test is met.

Exam tips

  • Draw the table first: segment, total revenue, profit/loss, assets, tick or cross. It earns method marks even if arithmetic slips.
  • In MCQs, check which base the question uses: combined revenue including intersegment for the 10% test, entity revenue for the 75% test.
  • Watch for loss-making segments. Use absolute values and the greater of the two profit/loss totals.
  • If the 75% test fails, say clearly that you add segments under paragraph 15 and name which one you add and why.
  • Conclude with a one-line recommendation of the segments to report, and how the remainder is shown as 'all other segments'.

Practice questions from Operating Segments (Ind AS 108)

Quantitative Thresholds for Reportable Segments in other exams

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

Quantitative Thresholds for Reportable Segments: frequently asked questions

Must a segment pass all three 10% tests to be reportable?

No. Paragraph 13 says a segment is reportable if it meets any of the thresholds. One test is enough.

What if the reportable segments cover less than 75% of entity revenue?

Paragraph 15 requires you to identify additional operating segments as reportable, even if they fail the 10% tests, until at least 75% of the entity's revenue is covered.

Can a segment below 10% still be reported?

Yes. Management may report it separately if it believes the information would be useful to users of the financial statements. Small segments may also be combined if they have similar economic characteristics and share a majority of the aggregation criteria.

How are non-reportable segments shown?

They are combined in an 'all other segments' category, shown separately from other reconciling items. You must describe the sources of the revenue included in it.