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CMA Final · Corporate Financial Reporting · Operating Segments (Ind AS 108)

Narmada Textiles Ltd's board receives two sets of reports: one by product line (cotton, silk, synthetics) and another by geographic region. Each product line has a manager responsible for it, while regional reports are prepared only for the board's information. The chief operating decision maker (CODM) uses both sets. Which approach does Ind AS 108 support for identifying the operating segments?

When the CODM uses more than one set of segment information, the entity identifies a single set of components as operating segments by considering the nature of business activities, the existence of responsible managers and the information presented to the board. Product lines with managers fit this here.

  1. AAlways treat the geographic regions as the operating segments
  2. BReport both sets as operating segments in full
  3. CConsider factors such as the nature of business activities, the existence of responsible managers and the information presented to the board to identify a single set of components as operating segmentsCorrect
  4. DChoose the set that gives the larger number of segments

Explanation

Where the CODM uses more than one set of segment information, other factors identify a single set of components as operating segments. These include the nature of the business activities, the existence of managers responsible for each component, and the information presented to the board. Here the product lines have responsible managers, so they point to the operating segments. Reporting both sets in full is not what the standard prescribes.

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