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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Ananya Textiles Ltd's board of directors receives reports presenting its business by product line (cotton, silk, synthetic). The CEO, who allocates resources and assesses performance, receives a second set of reports presenting the business by geographic region. Each product line and each region has a manager. Under Ind AS 108, how is the set of operating segments to be determined?

When the chief operating decision maker uses more than one set of segment information, the entity looks to other factors to identify a single set of components as operating segments. These include the nature of each component's activities, responsible managers, and information presented to the board of directors.

  1. AUse the board's product-line reports automatically, because the board is senior to the CEO
  2. BConsider other factors such as the nature of business activities of each component, the existence of managers responsible for them, and information presented to the board, to identify the single set that constitutes operating segmentsCorrect
  3. CReport both sets of components as operating segments in full
  4. DChoose the geographic set because geography is always the primary basis

Explanation

Where the CODM uses more than one set of segment information, Ind AS 108 says other factors may identify a single set of components as operating segments. These include the nature of each component's activities, the existence of managers responsible for them, and information presented to the board. The board is not automatically decisive, and geography is not always primary.

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