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CA Intermediate · Advanced Accounting · AS 17 Segment Reporting

Tapti Engineering Ltd.'s Fabrication segment had the following items in ₹ lakh for the year: external sales 800; inter-segment transfers to the Assembly segment at agreed transfer prices 200; direct operating expenses 760; common expenses allocable to the segment on a reasonable basis 40; interest on company borrowings 50; unallocable head-office expenses 30; income-tax expense 20. What is the segment result of the Fabrication segment under AS 17?

The segment result is ₹200 lakh. Segment revenue is external sales plus inter-segment transfers, which is ₹1,000 lakh. Segment expense is direct expenses plus allocable common expenses, which is ₹800 lakh. Interest, unallocable head-office expenses and income tax are excluded from the segment result.

  1. A₹240 lakh
  2. B₹200 lakhCorrect
  3. C₹150 lakh
  4. D₹0

Explanation

Segment revenue includes both external sales and inter-segment transfers: 800+200 = 1,000. Segment expense includes direct expenses and allocable common expenses: 760+40 = 800. Interest, unallocable head-office costs and income tax are excluded. Segment result = 1,000−800 = 200. Option A omits the allocable common expenses. Option D omits inter-segment revenue (800−800).

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