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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Narmada Engineering Ltd has a Machinery segment with the following items at the year end (₹ lakh): property, plant and equipment used in the segment 500; inventories 120; trade receivables 80 against which a provision for doubtful debts of 5 relates; bank balance used in segment operations 20; share of common plant allocable on a reasonable basis 60; long-term investments of the company 90; advance income-tax paid 25. What is the segment assets figure to be disclosed under AS 17?

Segment assets are ₹775 lakh. This is the sum of operating assets (500 + 120 + 20), receivables net of the related provision (75) and the reasonably allocable common plant (60). Investments and advance income-tax are not operating assets, so they are excluded.

  1. A₹865 lakh
  2. B₹800 lakh
  3. C₹780 lakh
  4. D₹775 lakhCorrect

Explanation

Segment assets are operating assets used by the segment, plus a reasonable share of common assets, net of related allowances. The total is 500 + 120 + (80 − 5) + 20 + 60 = ₹775 lakh. Investments and income-tax assets are excluded. ₹780 lakh ignores the provision, ₹800 lakh wrongly adds advance tax, and ₹865 lakh wrongly adds the investments.

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