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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Narmada Enterprises has five segments with segment results (in ₹ lakh): P profit 60, Q profit 40, R loss (30), S profit 10 and T loss (20). Applying the segment result test of AS 17 (absolute result at least 10% of the greater of combined profit of profit-making segments or combined loss of loss-making segments), how many segments are reportable on this test?

Four segments are reportable. The base is the greater of combined profits (₹110 lakh) or combined losses (₹50 lakh), so the threshold is ₹11 lakh. P, Q, R and T have absolute results above this, but S with ₹10 lakh does not.

  1. ATwo
  2. BThree
  3. CFourCorrect
  4. DFive

Explanation

Combined profit is 60+40+10 = 110 and combined loss is 30+20 = 50. The greater is 110, so the threshold is 11. P (60), Q (40), R (30) and T (20) exceed 11 in absolute terms; S (10) does not. That is four segments. Using the loss total of 50 as base (threshold 5) would wrongly make S reportable too, giving five.

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