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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Arjun Pharma Ltd presents internal reports to its CODM in two ways: one by product lines (Generics, Branded) and another by geographic regions. Each product line has a manager responsible for it, and the board of directors is given the product line information. Regional reports are prepared only for sales tracking. How should the operating segments be identified under Ind AS 108?

The product-line set should be used. Where the CODM receives more than one set of information, Ind AS 108 looks to the nature of business activities, responsible managers and information presented to the board, and product lines meet these factors while regional reports do not.

  1. AUse the geographic set because it covers all revenue
  2. BUse the product-line set, considering the nature of activities, the existence of responsible managers and the information presented to the boardCorrect
  3. CPresent both sets as separate operating segments
  4. DAggregate everything into a single segment since two sets exist

Explanation

When the CODM uses more than one set of segment information, other factors identify the single set that constitutes operating segments. These include the nature of business activities, the existence of managers responsible for components, and information presented to the board. Product lines satisfy all of these, while regional reports are not backed by managers or board information.

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