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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Sagar Textiles Ltd has a corporate headquarters that incurs administrative costs and earns only incidental revenue, and it also runs a post-employment benefit plan for its employees. The CODM reviews results of the Spinning division and the Weaving division separately. Which statement is correct under Ind AS 108?

Only the Spinning and Weaving divisions qualify as operating segments. A corporate headquarters earning no or only incidental revenue is not an operating segment, and Ind AS 108 specifically states that post-employment benefit plans are never operating segments.

  1. AThe corporate headquarters and the post-employment benefit plan are each operating segments
  2. BThe corporate headquarters is an operating segment but the benefit plan is not
  3. COnly the Spinning and Weaving divisions can be operating segments; the headquarters need not be one, and the post-employment benefit plan is not an operating segmentCorrect
  4. DThe post-employment benefit plan is an operating segment if its assets are material

Explanation

Ind AS 108 says not every part of an entity is an operating segment. A corporate headquarters that earns no revenue or only incidental revenue is not an operating segment, and an entity's post-employment benefit plans are not operating segments. Only the divisions reviewed by the CODM qualify. Options treating the headquarters or the plan as segments are wrong.

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