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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Kaveri Industries Ltd. has five business segments. The figures below are in ₹ lakh, and segment revenue includes inter-segment sales. Segment | Revenue | Result | Assets A | 400 | 60 profit | 500 B | 300 | 40 profit | 300 C | 150 | 10 profit | 120 D | 100 | 15 loss | 60 E | 50 | 5 profit | 20 Total | 1,000 | 100 net profit | 1,000 A segment is reportable if it meets any one of the 10% tests: revenue, result (greater of combined profit or combined loss in absolute terms), or assets. How many segments are reportable on these tests alone?

Four segments are reportable. The revenue threshold is ₹100 lakh. Segments A, B and C clearly exceed it, and D equals it, which qualifies because AS 17 requires 10 per cent or more. Segment E fails the revenue, result and asset tests, so it is not reportable on these tests.

  1. A3
  2. B4Correct
  3. C5
  4. D2

Explanation

Revenue threshold is 10% of 1,000 = 100. Combined profit of profit-making segments = 60+40+10+5 = 115, which is greater than the combined loss of 15, so the result threshold is 11.5. The asset threshold is 100. A, B and C qualify on revenue. D qualifies because its revenue of 100 is exactly 10%, and the standard says '10% or more'. E fails all three tests. So 4 segments are reportable. Option A wrongly treats the threshold as 'more than 10%'.

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