(Summary) Ind AS 108

Operating Segments

An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

Apply to companies to which Ind ASs notified under the Companies Act apply.

If a financial report contains both the consolidated FS of a parent and the parent’s separate FS, segment information is required only in the consolidated FS.

Operating segments:

An operating segment is a component of an entity:

  • That engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity),
  • whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
  • For which discrete financial information is available.

Aggregation criteria:

  • Two or more segments may be aggregated into a single segment if aggregation is consistent with the core principle, the segments have similar economic characteristics, and the segments are similar in each of the following respects:
  1. the nature of the products and services;
  2. the nature of the production processes;
  3. the type or class of customer for their products and services;
  4. the methods used to distribute their products or provide their services; and

if applicable, the nature of the regulatory environment, For E.g. banking, insurance or public utilities.

  • Disclose information to enable users of FS to evaluate the nature and financial effects of the business activities.
  • Disclose the following general information:
  1. Factors used to identify the entity’s reportable segments, including the basis of organisation.
  2. The judgements made by management in applying the aggregation criteria.
  • Disclose the following about each reportable segment if the specified amounts are included in the measure of segment profit or loss reviewed by the chief operating decision maker, or are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss:
  1. Revenues from external customers;
  2. Revenues from transactions with other operating segments of the same entity;
  3. Interest revenue;
  4. Interest expense;
  5. Depreciation and Amortisation;
  6. Material items of income and expense
  7. The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method;
  8. Income tax expense or income; and
  9. Material non-cash items other than depreciation and amortisation.
  • Disclose the following about each reportable segment if the specified amounts are included in the measure of segment assets reviewed by the chief operating decision maker or are otherwise regularly provided to the chief operating decision maker, even if not included in the measure of segment assets:
  1. The amount of investment in associates and joint ventures accounted for by the equity method, and
  2. The amounts of additions to non-current assets other than financial instruments, deferred tax assets, net defined benefit assets and rights arising under insurance contracts.

 

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