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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Kaveri Foods Ltd reports internally to its CODM in two ways: (1) by product lines such as snacks and beverages, each with a dedicated segment manager, and (2) by geographic regions, without dedicated regional managers. The board of directors is presented only the product-line information. Which statement is consistent with Ind AS 108?

The product lines are the operating segments. When the CODM uses more than one set of information, Ind AS 108 looks to the nature of business activities, existence of responsible managers and information presented to the board. Product lines meet all these factors, while regions do not, so a single set is chosen.

  1. AThe entity must report both sets as operating segments
  2. BOnly the geographic set qualifies since geography is always the basis
  3. CFactors such as the nature of activities, existence of responsible managers and information presented to the board may identify the product lines as the single set of operating segmentsCorrect
  4. DThe statutory auditor decides which set forms the operating segments

Explanation

Where the CODM uses more than one set of segment information, other factors identify a single set of components as operating segments. These include the nature of business activities, the existence of managers responsible for them, and information presented to the board. Product lines satisfy all three here, so they are the segments. Option A is wrong because only one set is identified.

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