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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Konkan Agro Ltd has total external revenue of ₹800 lakh. Its segments that qualify as reportable under the 10% tests have combined external revenue of ₹560 lakh. Applying the AS 17 requirement that reportable segments must cover a minimum share of enterprise external revenue, what is the minimum additional external revenue from other segments that must be included in reportable segments?

The minimum additional external revenue is ₹40 lakh. AS 17 requires reportable segments to cover at least 75% of total external revenue, which is ₹600 lakh here. Existing reportable segments contribute ₹560 lakh, so further segments worth at least ₹40 lakh must be included.

  1. A₹80 lakh
  2. B₹40 lakhCorrect
  3. C₹600 lakh
  4. D₹240 lakh

Explanation

AS 17 requires reportable segments to account for at least 75% of total external revenue. 75% of ₹800 lakh is ₹600 lakh. The reportable segments hold ₹560 lakh, so ₹40 lakh more must be covered by adding further segments. ₹80 lakh is the 10% figure, which is the wrong test.

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