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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

For the year, a manufacturing segment of Raghav Ltd. reports the following: sales to external customers ₹480 lakh; inter-segment transfers to another segment, priced as actually used by the company, ₹60 lakh; interest on loans advanced to other segments ₹12 lakh; and profit on sale of long-term investments ₹20 lakh. The segment's operations are not primarily financial. What is the segment revenue under AS 17?

Segment revenue is ₹540 lakh. It consists of external sales of ₹480 lakh plus inter-segment transfers of ₹60 lakh. Interest on inter-segment loans and gains on sale of investments are excluded, because the segment is not primarily engaged in financial operations.

  1. A₹480 lakh
  2. B₹540 lakhCorrect
  3. C₹552 lakh
  4. D₹572 lakh

Explanation

Segment revenue includes external sales and inter-segment transfers: 480 + 60 = ₹540 lakh. Interest on inter-segment loans is excluded because the segment is not primarily financial, and gains on sale of investments are also excluded. Including the interest gives ₹552 lakh, and including both gives ₹572 lakh.

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