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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Kaveri Industries Ltd. has a manufacturing segment that is a reportable segment. For the year, the segment had sales to external customers of ₹600 lakh and sales to the company's other segments of ₹150 lakh. It also earned interest of ₹20 lakh on loans given to other segments (the segment is not primarily financial in nature) and an extraordinary gain of ₹10 lakh. What is the segment revenue under AS 17?

The segment revenue is ₹750 lakh. AS 17 includes sales to external customers and inter-segment sales, but excludes extraordinary items and interest on loans to other segments, because the segment is not primarily engaged in financial operations.

  1. A₹600 lakh
  2. B₹750 lakhCorrect
  3. C₹770 lakh
  4. D₹780 lakh

Explanation

Segment revenue = external sales + inter-segment sales = 600 + 150 = ₹750 lakh. Interest on inter-segment loans is excluded unless the segment's operations are primarily financial, and extraordinary items are excluded. Choosing ₹770 lakh wrongly adds the interest income.

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