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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Gomti Pharma Ltd reported two business segments in earlier years. In the current year, its Diagnostics division, which was not a reportable segment before, has crossed the 10% revenue threshold for the first time. Which treatment is correct under AS 17?

Diagnostics must be reported as a separate segment, and prior-period segment data must be restated to show it separately, unless this is impracticable. AS 17 requires comparability, so a newly reportable segment cannot appear in the current year alone.

  1. AReport Diagnostics as a separate segment from the current year only, with no change to prior-period data
  2. BReport Diagnostics separately and restate prior-period segment data to show it as a separate segment, unless impracticableCorrect
  3. CContinue to merge Diagnostics into the existing segments until it exceeds the threshold for three consecutive years
  4. DDisclose Diagnostics only in the notes on contingent liabilities

Explanation

AS 17 says a segment that becomes reportable in the current period must be reported separately, and the prior-period segment information is restated to reflect the newly reportable segment as a separate segment. Restating is skipped only if it is impracticable. No rule requires a three-year wait, and the notes on contingent liabilities are not relevant to segment reporting.

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