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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Sahyadri Textiles Ltd reports the following for its Fabrics segment (₹ lakh): sales to external customers 900; sales to the Garments segment at transfer price 100; expenses directly attributable to the segment 650; common expenses allocable to the segment on a reasonable basis 50; interest on the company's general borrowings 40; the segment is not a financial operation. What is the segment result under AS 17?

The segment result is ₹300 lakh. Segment revenue of ₹1,000 lakh includes inter-segment sales, and segment expense of ₹700 lakh includes direct and reasonably allocable common expenses. Interest on general borrowings is excluded because the segment is not a financial operation.

  1. A₹300 lakhCorrect
  2. B₹260 lakh
  3. C₹200 lakh
  4. D₹160 lakh

Explanation

Segment revenue includes inter-segment sales, so it is 900 + 100 = 1,000. Segment expense includes direct expenses and reasonably allocable common expenses: 650 + 50 = 700. Interest is excluded for a non-financial segment. Segment result = 1,000 − 700 = ₹300 lakh. ₹260 lakh wrongly deducts interest, and ₹200 lakh wrongly omits the inter-segment revenue.

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