Accounting Standard 17 (AS 17): Segment Reporting | Advanced Accounting for CA Intermediate PDF Download

Applicability of Accounting Standard 17

Accounting Standard 17 applies to specific categories of businesses for a given accounting period. These include:

• Businesses with equity or debt securities listed in India and internationally
• Businesses in the process of listing their securities as approved by the board of directors
• Banks, including cooperative banks
• Financial institutions
• Businesses engaged in the insurance sector
• Businesses with turnover exceeding Rs. 50 crores in the previous accounting period, excluding other income
• Businesses with borrowings, including public deposits, exceeding Rs. 10 crores during a given accounting period
• Holding and subsidiary businesses of any of the above during a given accounting period

Business and Geographic Segments

• Business Segment: A business segment is a distinguishable unit of a business involved in offering individual products or services or a group of related products or services. It operates with unique risks and returns compared to other segments.
• Geographical Segment: A geographical segment is a distinguishable unit of a business providing products or services within a specific economic environment. It faces distinct risks and returns different from units operating in other economic environments.

Other Definitions

• Reportable Segment: A business or geographical segment that necessitates disclosed segment information.
• Enterprise Revenue: Revenue from sales to external customers as reported in the profit and loss statement.
• Segment Revenue: Comprises the fraction of enterprise revenue directly linked to a segment, a portion of enterprise revenue reasonably allocated to a segment, and revenue from transactions with other segments of the enterprise.
• Segment Expense: Includes expenses directly attributable to the operating activities of a segment, along with expenses reasonably allocated to the segment, including those related to transactions with other segments of the enterprise.
• Segment Result: The variance between segment revenue and segment expense.
• Segment Assets: Operating assets utilized by a segment in its activities, directly attributable to the segment or reasonably allocated to it.
• Segment Liabilities: Operating liabilities employed by a segment in its operations, directly attributable to the segment or reasonably allocated to it.

Identifying Reportable Segments

Reportable segments are identified based on specific criteria:

• Revenue from sales to external customers and transactions with other segments amounting to 10% or more of total revenue
• Segment result being 10% or more of the combined result of all segments in profit or loss
• Segment assets constituting 10% or more of total assets of a segment

Segment Accounting Policies

• Segment information should adhere to the accounting policies used for preparing the enterprise's financial statements. Assets and liabilities shared by two or more segments should be allocated to the respective segments, provided their related revenues and expenses are also allocated accordingly.

Primary Reporting Format

An enterprise must disclose the following for each reportable segment:

• Segment revenue
• Segment result
• Total carrying amount of segment assets
• Total amount of segment liabilities
• Costs incurred during the period to acquire segment assets for future use
• Depreciation and amortization expenses related to segment assets
• Significant non-cash expenses apart from depreciation and amortization concerning segment assets

Secondary Segment Information

If the Primary Segment Reporting Format is Business Segments:

• Segment revenue from external customers by geographical area
• Total carrying amount of segment assets by geographical location
• Total cost to acquire segment assets by geographical location

If the Primary Segment Reporting Format is Geographical Segments:

• Segment revenue from external customers
• Total carrying amount of segment assets
• Total cost to acquire segment assets