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

Sagar Foods Ltd reports internally to its board in two ways: by product line (snacks, beverages, dairy), each with a segment manager, and by region (North, South), where regional heads have no segment-level responsibility. The CODM reviews both sets of information. Which approach is consistent with Ind AS 108?

Product lines are the operating segments. Where the CODM uses several sets of information, Ind AS 108 looks to the nature of activities, existence of responsible managers and information given to the board, and only product lines have segment managers.

  1. AReport both product and regional sets as operating segments simultaneously
  2. BChoose the set that has the largest revenue as the operating segments
  3. CUse other factors such as nature of activities, existence of responsible managers and information presented to the board to identify one set, here the product linesCorrect
  4. DReport whichever set the statutory auditor prefers

Explanation

When the CODM uses more than one set of segment information, Ind AS 108 says other factors identify a single set of components as operating segments: nature of business activities, existence of managers responsible for them, and information presented to the board. Product lines have responsible managers and regions do not, so product lines are the segments. Size or auditor preference is not the test.

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