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Corporate Financial Reporting · Operating Segments (Ind AS 108)

Ind AS 108 Segment Disclosures and Measurement

Updated 11 October 2026 · Fact-checked

Ind AS 108 requires you to disclose, for each reportable segment, profit or loss, and assets and liabilities if regularly given to the CODM, plus specified items and the basis of measurement. You then reconcile segment totals for revenue, profit or loss, assets and liabilities to entity amounts, identifying every material reconciling item.

Understand Segment Disclosures and Measurement

Ind AS 108 asks one question: what does the chief operating decision maker (CODM) see? The standard follows the management approach. Segment numbers are reported the way management uses them internally, not forced into the entity's accounting policies.

Paragraph 21 sets three groups of disclosure for each period with a statement of profit and loss: general information (paragraph 22), information about segment profit or loss, assets, liabilities and the basis of measurement (paragraphs 23-27), and reconciliations (paragraph 28). Reconciliations of balance sheet amounts are needed for each balance sheet date presented.

A profit or loss measure is always reported for each reportable segment. Total assets and total liabilities are reported only if such amounts are regularly provided to the CODM. Other items, such as interest revenue, depreciation and income tax expense, are disclosed only if they are included in the segment profit or loss the CODM reviews, or are otherwise regularly provided to the CODM.

Because segment figures follow the CODM's measure, they will often differ from the financial statements. Paragraph 28 bridges the gap. You reconcile segment revenue, profit or loss, assets, liabilities and other material items to the entity's figures, and describe each material reconciling item separately. Paragraph 27 adds explanation: how inter-segment transactions are accounted for, the nature of differences, changes in method, and asymmetrical allocations.

Key rules to remember

Revenue reconciliation
Total segment revenue ± unallocated amounts − inter-segment eliminations = Entity revenue
Paragraph 28(a). Segment revenue includes inter-segment sales if the CODM measure does; they are eliminated to reach entity revenue.
Profit or loss reconciliation
Total segment profit or loss ± unallocated items ± policy differences = Entity profit before tax and discontinued operations
Paragraph 28(b). If tax is allocated to segments, you may reconcile to profit after those items instead.
Assets reconciliation
Total segment assets + unallocated (corporate) assets − eliminations = Entity assets
Paragraph 28(c), when segment assets are reported.
Liabilities reconciliation
Total segment liabilities + unallocated liabilities − eliminations = Entity liabilities
Paragraph 28(d), when segment liabilities are reported.
Measurement rule
Segment amount = measure reported to the CODM
Paragraph 25. Allocations are included only if the CODM's measure includes them, and must be on a reasonable basis.
Multiple measures
If CODM uses more than one measure, report the one most consistent with Ind AS measurement
Paragraph 26. If only one measure is used, report that measure.
Interest presentation
Interest revenue and interest expense reported separately
Paragraph 23. Net presentation is allowed only if most of the segment's revenue is interest and the CODM relies primarily on net interest revenue; disclose that you have done so.

How to solve Segment Disclosures and Measurement questions

Use this sequence for any question on segment disclosures or reconciliations.

  1. 1Identify the reportable segments and the measure of profit or loss the CODM uses. Do not switch to Ind AS figures unless the question says so.
  2. 2List what must be disclosed: a profit or loss measure always; assets and liabilities only if regularly provided to the CODM.
  3. 3Check each specified item (interest, depreciation, tax and so on) against whether it is in the CODM's measure or regularly provided to the CODM.
  4. 4Total the segment figures for revenue, profit or loss, assets and liabilities.
  5. 5Identify reconciling items: unallocated corporate items, eliminations, and accounting policy differences.
  6. 6Prepare each reconciliation to the entity figure, with each material item shown separately and described.
  7. 7Add the paragraph 27 explanations: inter-segment pricing basis, nature of differences, changes in method, asymmetrical allocations.
  8. 8Check that each reconciliation arrives exactly at the entity figure in the financial statements.

Quickest way: Total, adjust, tie out

When to use it: Use when a numerical question gives segment data and asks for reconciliation in limited time.

  1. Write the segment total for the item first.
  2. List each unallocated item or elimination with its sign: add income and assets, deduct expenses and eliminations.
  3. Add up to the entity figure and tick it against the given balance.
  4. Label every line, because the standard requires material items to be identified separately.
  5. Write one line each on the CODM measure and inter-segment pricing basis for the theory marks.

Common mistakes in Segment Disclosures and Measurement

  • Remeasuring segment profit under the entity's accounting policies

    Students assume segment figures must match the financial statements.

    Fix: Use the CODM's measure (paragraph 25). Show policy differences as reconciling items.

  • Disclosing segment assets and liabilities in every case

    Students treat all three measures as equally mandatory.

    Fix: Profit or loss is always reported. Assets and liabilities only if regularly provided to the CODM (paragraph 23).

  • Forgetting inter-segment eliminations in the revenue reconciliation

    Students start from external sales and overlook that segment revenue may include transfers.

    Fix: Check whether the segment total includes inter-segment revenue and eliminate it to reach entity revenue.

  • Showing one lump sum as the reconciling difference

    Students want a quick balancing figure.

    Fix: Paragraph 28 requires all material reconciling items to be separately identified and described.

  • Netting interest income and expense by default

    Students copy the net presentation used for financial businesses.

    Fix: Report them separately unless most segment revenue is interest and the CODM relies mainly on net interest revenue.

  • Reconciling only the current period

    Students overlook the comparative requirement.

    Fix: Disclosure applies to each period with a profit and loss statement, and balance sheet reconciliations to each balance sheet date.

Worked examples

Example 1

Alpha Ltd reports two segments to its CODM. Segment A revenue is ₹6,00,000 (including ₹50,000 inter-segment sales) and Segment B revenue is ₹4,50,000 (all external). Alpha also earns ₹20,000 of unallocated other income not included in either segment's revenue and not part of revenue under Ind AS. Reconcile to entity revenue.

Show the solution
  1. Total segment revenue = ₹6,00,000 + ₹4,50,000 = ₹10,50,000.
  2. Eliminate inter-segment sales: ₹10,50,000 − ₹50,000 = ₹10,00,000.
  3. The unallocated other income of ₹20,000 is not revenue, so it is not added to revenue.
  4. Entity revenue is ₹10,00,000, with the elimination shown as a separately identified line.

Answer: Entity revenue = ₹10,00,000, reconciled from segment total ₹10,50,000 less inter-segment elimination ₹50,000.

Example 2

Beta Ltd has segment profits of ₹3,20,000 (X) and ₹1,80,000 (Y), as reported to the CODM. Unallocated corporate expenses are ₹70,000, interest expense not allocated is ₹40,000, and an accounting policy difference (CODM uses a different depreciation method) increases entity profit by ₹10,000. Reconcile to entity profit before tax. State what must also be explained under paragraph 27.

Show the solution
  1. Total segment profit = ₹3,20,000 + ₹1,80,000 = ₹5,00,000.
  2. Deduct unallocated corporate expenses: ₹5,00,000 − ₹70,000 = ₹4,30,000.
  3. Deduct unallocated interest expense: ₹4,30,000 − ₹40,000 = ₹3,90,000.
  4. Add the policy difference: ₹3,90,000 + ₹10,000 = ₹4,00,000.
  5. Show each of the three reconciling items on its own line with a description.
  6. Explain the nature of the depreciation difference, the basis of accounting for inter-segment transactions, any change in measurement method from prior periods, and any asymmetrical allocations.

Answer: Entity profit before tax = ₹4,00,000, with the three reconciling items separately identified and the paragraph 27 explanations given.

Exam tips

  • In theory answers, quote the principle first: segment amounts are the CODM's measure (paragraph 25).
  • Cite paragraph 28 when answering any reconciliation question and list all four reconciliations: revenue, profit or loss, assets, liabilities.
  • Remember the conditions: assets and liabilities are reported only if regularly provided to the CODM.
  • In MCQs, watch for options that say a disclosure is always required or that remeasurement to Ind AS is mandatory. Both are wrong.
  • Show every reconciling item on its own line, even in a short numerical answer.

Practice questions from Operating Segments (Ind AS 108)

Segment Disclosures and Measurement 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 and Measurement: frequently asked questions

What must Ind AS 108 disclose for each reportable segment?

A measure of profit or loss is always reported. Total assets and liabilities are reported if regularly provided to the CODM. Specified items such as interest, depreciation and tax are disclosed if included in the CODM's profit measure or otherwise regularly provided to the CODM.

Which reconciliations does Ind AS 108 require?

Paragraph 28 requires reconciliation of segment revenues, profit or loss, assets, liabilities and other material items to the entity's amounts. Material reconciling items must be separately identified and described.

Do segment numbers have to follow Ind AS accounting policies?

No. They follow the measure reported to the CODM. If the CODM uses more than one measure, you report the one most consistent with the entity's Ind AS measurement. Differences must be explained and reconciled.

Can interest income and expense be shown net for a segment?

Only if most of the segment's revenues are from interest and the CODM relies primarily on net interest revenue. You must also disclose that you have done so.