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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Kaveri Enterprises has total enterprise revenue of ₹800 lakh, all from external customers. Segments A (₹250 lakh), B (₹200 lakh) and C (₹110 lakh) are reportable under the 10% tests. The other segments have external revenue of D ₹90 lakh, E ₹70 lakh, F ₹40 lakh, G ₹30 lakh and H ₹10 lakh. None of these others meets any 10% test. Selecting the largest remaining segments first, what is the minimum number of additional segments that must be reported separately under AS 17?

One additional segment is needed. AS 17 requires reportable segments to cover at least 75% of enterprise external revenue. Segments A, B and C cover ₹560 lakh, which is 70% of ₹800 lakh. Adding segment D takes the total to ₹650 lakh, above the ₹600 lakh threshold.

  1. A0
  2. B1Correct
  3. C2
  4. D3

Explanation

The reportable segments' external revenue is 250+200+110 = ₹560 lakh, which is 70% of ₹800 lakh and below the 75% requirement (₹600 lakh). Adding D (₹90 lakh) brings it to ₹650 lakh (81.25%), which satisfies the rule. So one more segment is enough. Answering 0 ignores the 75% rule; 2 or 3 add segments that are not needed.

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