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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Mahesh Ltd. has five business segments with the following results (Rs lakh): P profit 40; Q profit 30; R loss (35); S profit 10; T loss (5). Segment revenues exceed the threshold in none of the cases for R, S, T, and the assets test is not met for any of them. Applying the 10% result test only, which segments pass it?

The greater of total profits (80) and total losses (40) is 80, so the threshold is Rs 8 lakh. Absolute results of P (40), Q (30), R (35) and S (10) all exceed it; only T (5) fails. So P, Q, R and S pass the test.

  1. AP and R only
  2. BP, Q and R onlyCorrect
  3. CP, Q, R and S
  4. DP and Q only

Explanation

Total profit of profitable segments is 80; total loss of loss-making segments is 40. The greater absolute amount is 80, so 10% is 8. Segment result is compared in absolute terms: P 40, Q 30, R 35 exceed 8; S 10 also exceeds 8. So P, Q, R, S pass. Re-check: S is 10 which is above 8, so S passes too.

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