As17

As17

1. Segment reporting Accounting Standard 17

2. content Introduction Objectives Enterprises Covered Key Definitions Reportable Segments Segment Accounting Policies

3. Introduction Also known as Segment Accounting Issued by Institute of Chartered Accountants of India Commencing on or after 1.4.2001

4. objective To Inform about the different types of Products and Services and the different Geographical Areas To Better understand the Performance To Better Assess the Risk and Returns To Throw more light on Mergers and Acquisition

5. Enterprises covered Enterprises which are listed on Stock Exchange Enterprises which are in Process of Listing on Stock Exchange Financial Institution Banks Insurance Business Enterprises whose Turnover exceeds 50 crore Enterprises whose Borrowing exceeds 10 crore Holding and Subsidiary Company of above Enterprises As per RBI Guidelines, Retail and Corporate banks also require to disclose their segment reports

6. DEFINITIONS A Business Segment A Distinguishable Component that is engaged in providing an Individual Product or Service Subject to Risk and Returns different from other Segments It can be Identify on the basis of:- Nature of Product Nature of Processes Nature of Customer Distribution Processes nature of the Regulatory Environment

7. A Geographical Segment A Distinguishable Component providing Products or Services within a particular Economic Environment Subject to Risks and Returns different from other Economic Environments This segment further divided based on Location of Production Facility Location of Customer

8. Reportable Segment Identification of Business Segment or Geographical Segment on the basis of foregoing definitions for which segment information is required to be disclosed by AS 17. Enterprise Revenue Revenue from Sales to External Customer

9. Segment Revenue is the aggregate of The Portion of Enterprise Revenue that is directly attributable to a Segment, The Relevant Portion of Enterprise Revenue that can be allocated on a Reasonable basis to a Segment Revenue from Transactions with other Segments

10. Segment Expense is the Aggregate of The Expense resulting from the Operating Activities of a segment that is directly attributable to the Segment The Relevant Portion of Enterprise Expense that can be allocated on a Reasonable basis Expense Relating to Transactions with other Segments It does not include:- Extraordinary items as defined in AS 5 Interest Expense Losses on Sales of Investments Income Tax Expense General Administrative Expenses

11. Segment Result Difference between Segment Revenue and Segment Expenses

12. Segment Assets Operating Assets that are employed by a Segment in its Operating Activities Assets directly attributable to the segment or can be allocated to the Segment on a Reasonable basis Segment Assets do not include Income Tax Assets

13. Segment Liabilities Operating Liabilities that result from the Operating Activities of a Segment Liabilities directly attributable to the segment or can be allocated to the Segment on a Reasonable basis Segment Liabilities do not include Income Tax Liabilities

14. Segment Accounting Policies The Accounting Policies adopted for Preparation and Presentation of the Financial Statements This policies help in indentifying Segments Method of pricing inter-segment transfers Basis for allocating Revenues and Expenses to Segments

15. Identifying Reportable Segments Primary and Secondary Segment Reporting Formats The Dominant Source and Nature of Risks and Returns will determine Primary Format for Reporting Segment Example:- If Risk and Return is dominantly affected by change in difference in product it produces then its Primary Format would be Business segment and Vice Versa

16. Matrix Approach If Risk and Return is dominantly affected by both change in difference in product it produces and Geographical Location in which it Operates As 17 does not require a Matrix presentation, however Matrix presentation is not prohibited.

17. IDENTIFICATION OF Reportable segment The Segment is Reportable if:- Its Revenue from Sales to external customers and from transactions with other segments is 10% or more of the total revenue of all segments Its segment result, whether profit or loss, is 10% or more of the combined result of all segments in profit, or the combined result of all segments in loss whichever is greater in absolute amount Its segment assets are 10% or more of the total assets of all segments.

18. Disclosure An Enterprise should Disclose the following for each Reportable Segment Segment Revenue classified into Revenue from Sales to external customers Transactions with other segments Segment result Total carrying amount of segment assets Total amount of segment liabilities Cost incurred to acquire segment assets Expense included in the segment result for depreciation and amortization Total amount of significant non-cash expenses

19. Problems on AS17

20. Thank yoU ..!! Presented by:- Shashikumarachari CV II Mcom , GFGC, Vijayanagar