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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Kaveri Textiles Ltd has total external enterprise revenue of ₹800 crore. Segments identified as reportable under the 10% tests together account for external revenue of ₹560 crore. As per AS 17, what minimum additional external revenue must be covered by identifying further segments as reportable, even if they are below the 10% thresholds?

The additional coverage needed is ₹40 crore. AS 17 requires reportable segments to account for at least 75% of enterprise external revenue, which is ₹600 crore here. Since the identified segments cover only ₹560 crore, more segments must be added to cover the ₹40 crore gap.

  1. A₹40 croreCorrect
  2. B₹140 crore
  3. C₹240 crore
  4. D₹60 crore

Explanation

AS 17 requires reportable segments to cover at least 75% of enterprise external revenue: 75% × 800 = ₹600 crore. Reportable segments cover only ₹560 crore, so the shortfall is 600 − 560 = ₹40 crore. Using 800 − 560 = 240 wrongly demands 100% coverage.

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