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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Kaveri Industries Ltd. has the following business segments (Rs. lakh): A: total revenue 520 (external 400, inter-segment 120); B: total revenue 300 (all external); C: total revenue 180 (all external); D: total revenue 100 (all external). Segment revenue is the only criterion being tested. Under AS 17, what is the minimum segment revenue (total of all segments, including inter-segment) that makes a segment reportable under the 10% revenue test?

The threshold is Rs. 110 lakh. AS 17 applies the 10% revenue test to total revenue of all segments, including inter-segment revenue, which is 1,100 lakh here. Using only external revenue would wrongly give 90 lakh, so segment D with 100 lakh is not reportable on this test.

  1. ARs. 110 lakhCorrect
  2. BRs. 100 lakh
  3. CRs. 90 lakh
  4. DRs. 80 lakh

Explanation

Total revenue of all segments (external plus inter-segment) = 520+300+180+100 = 1,100. Ten per cent is Rs. 110 lakh. A, B and C pass; D (100) fails this test. Using external revenue only (900, giving 90) would be wrong because AS 17 uses total revenue including inter-segment sales.

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