IND AS 108 OPERATING SEGMENTS

IND AS 108 OPERATING SEGMENTS

1. IND-AS108
OPERATING SEGMENTS
CA. NIRMAL GHORAWAT
B. COM (HONS), ACA

2. THE CORE PRINCIPLE
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 &
the ECONOMIC ENVIRONMENT in 
which it operates.
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9 August 2016CA. Nirmal Ghorawat

3. INDAS108 –APPLICATION SUMMARY
1
• Identify the CODM
2
• Identify the Operating 
Segments
3
• Determine the 
Reportable Segments
4
• Disclose the Required 
Information
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9 August 2016CA. Nirmal Ghorawat

4. CHIEFOPERATINGDECISIONMAKER
(CODM)
T
CODM is a FUNCTION, not aDESIGNATION.
T
CODM can be an
INDIVIDUAL or a GROUP
ofIndividuals.
T
CODMFUNCTIONis
H
Allocates the Resources of
the Entity H
Assess the performance of
the Operating Segments of
the Entity.
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9 August 2016CA. Nirmal Ghorawat

5. IDENTIFYTHECODM
Management Committee –of 
Board of Directors
Chief Executive Officer
Chief Financial Officer
The Board of Directors
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CA. Nirmal Ghorawat

6. OPERATINGSEGMENTS From which it MAYEARN REVENUES and INCUR EXPENSES(includingIntra-Group Revenue and Expenses) Whose operating results are REVIEWED regularly by the Entity’s CODM –
to assess performance and decide about resource
allocation.
For whichDISCRETE FinancialInformationis available
is a Component of an Entity.
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9 August 2016CA. Nirmal Ghorawat

7. OPERATINGSEGMENTS–SPECIFICEXAMPLE E
Startup Operations -
before Earning 
Revenues
E
Corporate HQ’s and
Functional
Departments (say
Internal Audit) not
earningRevenues
E
Post-Employment
BenefitsPlans
YES
NO
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9 August 2016CA. Nirmal Ghorawat

8. DETERMININGREPORTABLESEGMENTS AGGREGATION CRITERIA H
Aggregation is consistent with the Core Principle
H
Segments have similar economic characteristics
H
Segments similar on each of the Five Specified 
Criteria
1.
Nature of Products and Services
2.
Nature of the Production Processes
3.
Customer type or class
4.
Distribution Methods
5.
Nature of Regulatory Environment
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9 August 2016CA. Nirmal Ghorawat

9. DETERMININGREPORTABLESEGMENTS QuantitativeThresholds
A Segment is REPORTABLE if MAJORITY of its
REVENUEisfromSalestoExternalCustomers
Segment Revenue > 10% of Revenue from
allSegments(Revenue=External+Internal)
Segment Results > 10% of the Combined
Results
Segments Assets > 10% of the Total assets
ofallSegments
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9 August 2016CA. Nirmal Ghorawat

10. DETERMININGREPORTABLESEGMENTS Identify each Operating Segment that exceed the
QuantitativeThreshold
Aggregate
• any operating segments that meet all aggregation criteria
• Remaining operating segments below Quantitative threshold with
each other if the majority of aggregation criteria met
If Reportable Segments are less than 75% of Revenue,
add more reportable segments.
OPTIONAL 10
9 August 2016CA. Nirmal Ghorawat

11. DETERMININGREPORTABLESEGMENTS SEGMENTS NOT MEETING THE QUANTITATIVE THRESHOLD Management BELIEVEs that the 
Information is Useful for the Users 
Can be disclosed
in Current Year but was disclosed in 
Preceding Period
Can be disclosed if the 
Management judges that the 
Information is of Continuing 
Significance
SEGMENTS MEETING THE QUANTITATIVE THRESHOLD in Current Year but was Not 
disclosed in Preceding Period
Disclose
Restate prior period information 
(unless the necessary information is 
not available and cost to develop it 
would be excessive)
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9 August 2016CA. Nirmal Ghorawat

12. DETERMININGREPORTABLESEGMENTS
Information about other business activities and
operating segments that are not reportable shall be
combined and disclosed in an ‘ALL OTHER
SEGMENTS’ category separately from other
reconcilingitemsinthereconciliations.
The sources of the revenue included in the ‘ALL
OTHERSEGMENTS’categoryshallbedescribed
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9 August 2016CA. Nirmal Ghorawat

13. EXERCISE –ARRANGE
Obtain Organisation 
Chart
Determination of the 
CODM
Identification of 
documents and 
level of information 
reviewed by the 
CODM 
Identification of 
Operating 
Segments
Testing Quantitative 
Thresholds
Testing General 
Aggregation Criteria
Use of Aggregation 
Criteria for any 
remaining Operating 
Segments
Confirmation if 
identified 
Reportable 
Segments account 
for 75% Revenue
Reportable 
Segments
9 August 2016
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CA. Nirmal Ghorawat

14. EXERCISE -SOLUTION
Obtain 
Organisation 
Chart Determination of 
the CODM
Identification of 
documents and level of 
information reviewed 
by the CODM 
Identification of 
Operating 
Segments
Testing 
Quantitative 
Thresholds Testing General 
Aggregation 
Criteria
Use of Aggregation 
Criteria for any 
remaining Operating 
Segments
Confirmation if 
identified Reportable 
Segments account for 
75% Revenue
Reportable 
Segments
9 August 2016
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CA. Nirmal Ghorawat

15. DISCLOSURE
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 & 
the ECONOMIC ENVIRONMENT in 
which it operates.
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9 August 2016CA. Nirmal Ghorawat
IS IT THE SAME SLIDE AGAIN?? IS IT THE SAME SLIDE AGAIN?? IS IT THE SAME SLIDE AGAIN?? IS IT THE SAME SLIDE AGAIN??

16. DISCLOSURE
An Entity shall disclose the following for each
period for which a Statement of Comprehensive
Incomeispresented:
a.
GeneralInformation
b.
Information about Segment Revenues, Segment
Profit or Loss and Segment Assets and Liabilities
andbasisofMeasurement.
c.
ReconciliationStatement
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9 August 2016CA. Nirmal Ghorawat

17. D
ISCLOSURE–GENERALINFORMATION
E
Factors used to IDENTIFY the Entity’s Reportable
Segments
(viz., Nature of Products & Services, Nature of Production &
Distribution Processes, Geographical Areas, Regulatory
Environment, or a Combination of these Factors).
E
The Types of Products and Services from which
eachReportableSegmentderivesitsRevenue.
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9 August 2016CA. Nirmal Ghorawat

18. DISCLOSURE–
I
NFORMATION ABOUTSEGMENT
(REVENUES, P& LAND ASSETS& LIABILITIES)
ForeachReportingSegment,Entityshallreport:
H
Segment Profit or Loss
H
Total SegmentAssets
H
Segment Liabilities (if reviewed by CODM)
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9 August 2016CA. Nirmal Ghorawat

19. DISCLOSURE–
I
NFORMATION ABOUT REVENUES, P
& LAND ASSETS& LIABILITIES
For each Reporting Segment, Entity shall report (if
reviewed by CODM or otherwise Information is provided
to CODM, even ifnot includedin measure of P& L) :
H
Revenues from External Customers
H
Revenue from Intra-Group Transactions with Other Operating
Segments H
Interest Revenue & Interest Expenses (separately)
H
Depreciation andAmortisation
H
Material Items of Income and Expenses
H
Entity’s interest in P&L of Associates / JV accounted for under
the Equity Method H
Income tax expense
H
Material non-cash items other than Depreciation &
Amortisation.
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9 August 2016CA. Nirmal Ghorawat

20. D
ISCLOSURE–
R
ECONCILIATION
Total of Reportable Segments  T
Revenues to Entity’s Revenue
T
P & L to Entity’s P & L
T
Assets to Entity’s Assets
T
Liabilities to Entity’s Liabilities (if 
Reported)
T
Amounts for Every Material Item 
of Information disclosed to 
corresponding amount for the 
entity.
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9 August 2016CA. Nirmal Ghorawat

21. ENTITYWIDEDISCLOSURES
All entities subject to this IFRS including Entities that ha ve a
single reporting segment shall provide Information about : :  
Products and Services
 
GeographicalAreas
 
Major Customers
The amounts reported shall be based on the financial
information that is used to produce the entity’s financial
statements.
If Any Information is Not Available and Cost to develop it
would be excessive, the fact should be disclosed.
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9 August 2016CA. Nirmal Ghorawat

22. INFORMATIONABOUTPRODUCTS& SERVICES
Revenues from External Customers for each
product & services (or group of products and
services).
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9 August 2016CA. Nirmal Ghorawat

23. INFORMATIONABOUTGEOGRAPHICALAREAS  
RevenuesfromExternalCustomers&
 
Non-current Assets (other than Financial
Instruments, Deferred Tax Assets and Rights under
InsuranceContracts)
i.
Attributed to the Entity’s country of Domicile
ii.
Attributed to the all Foreign Countries from which the
Entity derives Revenue or holdsAssets.
If revenues from External Customers or Assets attributed to
an Individual Foreign Country are Material, the same shall b e
disclosedseparately.
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9 August 2016CA. Nirmal Ghorawat

24. INFORMATIONABOUTMAJORCUSTOMERS C
Extent of its Reliance on Major Customers
C
If Revenues from transaction with single external customer
amount to 10% or more of the Entity’s Revenue, the Entity shall
Disclose:
H
the Fact;
H
the total amount of Revenues from each such Customer;
H
the Identity of the Segment(s) reporting such Revenue
H
Need NOT Disclose – Identity of the Customer
A group of Entities known to the Reporting Entity to be under
common control shall be considered a single customer.
Government (and entities known to the Reporting Entity to be u nder
the control of that Government shall be considered a single
customer.
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9 August 2016CA. Nirmal Ghorawat