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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

For Himalaya Textiles Ltd.'s Segment X, the following data (₹ lakh) is available: sales to external customers 500; sales to other segments at transfer prices 100; operating expenses including depreciation 420; interest expense on borrowings 25; income tax expense 30; dividend income from investments (not a financial segment) 10. What is the segment result under AS 17?

The segment result is ₹180 lakh. Segment revenue is external plus inter-segment sales, ₹600 lakh, less operating expenses of ₹420 lakh. Interest, income tax and dividend income from investments are not part of segment revenue or expense for a non-financial segment, so they are excluded.

  1. A155
  2. B180Correct
  3. C125
  4. D190

Explanation

Segment revenue = 500 + 100 = 600, since inter-segment sales are included. Dividend income is excluded from segment revenue for a non-financial segment. Segment result is before interest and income tax, so it equals 600 − 420 = 180. Deducting interest gives 155, and deducting interest and tax gives 125, both wrong. Adding dividend gives 190, also wrong.

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