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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Kaveri Industries Ltd reports internally to its CODM using two sets of information: one by product lines (each with a segment manager) and another by geographical regions (reviewed by the board only). Both sets are used by the CODM to some extent. Which approach is consistent with Ind AS 108 in determining the operating segments?

The entity should use other factors, namely the nature of each component's business activities, the existence of managers responsible for them and the information presented to the board, to identify a single set as operating segments. The standard does not allow two sets or an arbitrary choice.

  1. ATreat both product lines and regions as operating segments, giving two separate sets
  2. BAlways choose the geographical set because the standard prefers geography
  3. CChoose the set at random, since either is acceptable without any factors
  4. DConsider other factors such as the nature of business activities of each component, existence of managers responsible for them and information presented to the board, to identify a single set as operating segmentsCorrect

Explanation

Where the CODM uses more than one set of segment information, Ind AS 108 says other factors identify a single set of components as operating segments. These include the nature of the business activities of each component, the existence of managers responsible for them, and information presented to the board of directors. Here product lines have managers, supporting them as the segments.

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