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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Gujarat Polymers Ltd. sells plastics, pipes and films across India and abroad. Its risks and returns are affected predominantly by differences in the products it makes, and only secondarily by the regions in which it sells. How should it present segment information under AS 17?

Business segments should be the primary format and geographical segments the secondary format. AS 17 selects the primary format by the dominant source and nature of risks and returns. Because product differences dominate for this company, business segments carry full disclosures, while geographical segments need only the reduced secondary disclosures.

  1. ABusiness segments as the primary format and geographical segments as the secondary formatCorrect
  2. BGeographical segments as the primary format and business segments as the secondary format
  3. CBoth formats given equal primary-level disclosure
  4. DOnly one consolidated segment, since both bases apply

Explanation

AS 17 uses the dominant source and nature of the enterprise's risks and returns to choose the primary reporting format. Here products dominate, so business segments are primary and geographical segments are secondary with reduced disclosures. Treating both as primary is not what the Standard requires.

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