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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Segment X of Narmada Engineering Ltd. (not a financial segment) reports: sales to external customers ₹800 lakh; inter-segment sales ₹100 lakh; expenses directly attributable ₹620 lakh; common expenses reasonably allocable ₹40 lakh; interest expense on borrowings ₹30 lakh; income tax ₹20 lakh; interest income on surplus deposits ₹10 lakh. What is the segment result under AS 17?

The segment result is ₹240 lakh. Segment revenue includes inter-segment sales, giving ₹900 lakh, and allocable expenses total ₹660 lakh. Interest, interest income of a non-financial segment and income tax are excluded from segment result under AS 17.

  1. A₹240 lakhCorrect
  2. B₹210 lakh
  3. C₹200 lakh
  4. D₹140 lakh

Explanation

Segment revenue = 800 + 100 = ₹900 lakh. Segment expense = 620 + 40 = ₹660 lakh. Segment result = 900 − 660 = ₹240 lakh. Interest expense, interest income (non-financial segment) and income tax are excluded. ₹140 lakh wrongly leaves out inter-segment sales, and ₹210 lakh wrongly deducts interest.

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