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

Tarang Industries Ltd reports internally by product line to its board of directors and also by geography to its CEO. Both sets of information are used by the chief operating decision maker. Under Ind AS 108, which factors may help identify the single set of components that constitute the operating segments?

When more than one set of segment information is used, Ind AS 108 points to other factors: the nature of each component's business activities, the existence of managers responsible for them, and the information presented to the board of directors. These identify the single set that forms the operating segments.

  1. AOnly the geographic report, because the CEO is always the CODM
  2. BThe nature of business activities of each component, the existence of managers responsible for them, and information presented to the board of directorsCorrect
  3. COnly the report with the larger number of components
  4. DThe set of components chosen by the statutory auditor for audit convenience

Explanation

Paragraph 8 states that where the CODM uses more than one set of segment information, other factors may identify a single set of components as operating segments. These include the nature of the business activities of each component, the existence of managers responsible for them, and information presented to the board. The other options introduce criteria the Standard does not provide.

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