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

Sahyadri Industries Ltd has a corporate headquarters that incurs administrative costs and earns only incidental revenue, such as occasional sub-letting of an unused floor. It also has a post-employment benefit plan for its employees. How should these be treated for identifying operating segments under Ind AS 108?

Neither is an operating segment. A corporate headquarters earning no revenue or only incidental revenue does not qualify, and Ind AS 108 expressly says post-employment benefit plans are not operating segments. Reports given to the CODM do not change this.

  1. AThe headquarters is an operating segment because it incurs expenses, while the post-employment benefit plan is not
  2. BThe post-employment benefit plan is an operating segment because it holds assets, while the headquarters is not
  3. CBoth are operating segments if the CODM receives reports on them
  4. DNeither the headquarters nor the post-employment benefit plan is an operating segmentCorrect

Explanation

Ind AS 108 says a corporate headquarters or functional departments that earn no revenue, or only incidental revenue, are not operating segments. It also states that an entity's post-employment benefit plans are not operating segments. So neither qualifies, and the option treating the headquarters as a segment because it incurs expenses ignores the revenue requirement.

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