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CMA Final · Corporate Financial Reporting · Operating Segments (Ind AS 108)

Gangotri Industries Ltd has a corporate headquarters that houses the finance, legal and HR functions. The headquarters earns no revenue except a small amount of incidental interest on surplus cash. Separately, the company's post-employment benefit plans are managed by a trust. How should these be treated under Ind AS 108?

Neither is an operating segment. Ind AS 108 says a corporate headquarters or functional departments that earn no revenue, or only incidental revenue, are not operating segments, and an entity's post-employment benefit plans are expressly excluded from being operating segments.

  1. AThe corporate headquarters and the post-employment benefit plans are both reported as operating segments
  2. BThe corporate headquarters is an operating segment, but the post-employment benefit plans are not
  3. CNeither the corporate headquarters, which earns no revenue or only incidental revenue, nor the post-employment benefit plans are operating segmentsCorrect
  4. DThe post-employment benefit plans are an operating segment, but the corporate headquarters is not

Explanation

Ind AS 108 says not every part of an entity is an operating segment. A corporate headquarters or functional departments that earn no revenue, or only incidental revenue, are not operating segments. Post-employment benefit plans are also expressly stated not to be operating segments. So the option that treats both as segments is wrong.

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