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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Kaveri Products Ltd. has six segments. Segment results in Rs lakh: profit-making segments P 60, Q 20, R 12 and S 8; loss-making segments T (25) and U (15). Applying only the result test of AS 17, how many segments are reportable?

Five segments are reportable. The result test compares each segment's absolute result with 10% of the greater of the combined profit of profitable segments (Rs 100 lakh) or the combined loss of loss-making segments (Rs 40 lakh). The threshold is Rs 10 lakh, so every segment except S qualifies.

  1. A4
  2. B5Correct
  3. C6
  4. D3

Explanation

Combined profit of profit segments = 100; combined loss of loss segments = 40. The greater in absolute terms is 100, so the threshold is 10% of 100 = Rs 10 lakh. Absolute results of P (60), Q (20), R (12), T (25) and U (15) are at least 10, while S (8) is not, so 5 qualify. Using the loss total of 40 (threshold 4) would wrongly give 6.

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