AS 17 AS 17

BY BY

DR.PRANAV SARASWATDR.PRANAV SARASWAT

Short questions:1. List down the enterprises forwhich AS 17 are mandatory?

a. Listing criteria: Enterprises whose equity or debtsecurities are listed on a recognized stockexchange and enterprises that are in the process ofissuing equity or debt securities that will be listedon a recognized stock exchange in India asevidenced by the BOD’s resolution in this regard.

b. Turnover criteria: All other commercial industrialand business reporting enterprises, whose turnoverfor the accounting period exceeds Rs. 50 crores.

2. What is the objective of AS 17?

a. Objective of this statement is to establishthe principles for reporting financialinformation about the different types ofproducts and services an enterprisesproduces and different geographical areasin which it operates

3. What are the advantages of segmentinformation?

a. Segment information helps users offinancial statements:

- Better understand the performance ofthe enterprise

- Better access the risks and returns ofthe enterprise

- Make more informed judgments aboutthe enterprise as a whole

4. How the segment information need to bepresented?

If a single financial report contains bothconsolidated financial statements and theseparate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements

5. Define business segment?

A business segment is a distinguishablecomponent of an enterprise:

- That is engaged in providing anindividual product or service or agroup of related products orservices, and

- That is subject to risks and returns thatare different from those of otherbusiness segments.

6. Define geographical segment?

A distinguishable component of a enterprise:- That is engaged in providing productsor services within a particular economicenvironment and,

- That is subject to risks and returns thatare different from those of componentsoperating in other economicenvironments

7. Define reportable segment?

- Reportable segment is a businesssegment or a geographical segment

- Identified on the basis of foregoingDefinitions

- For which segment information isrequired to be disclosed by thisstatement.

What are the factors that should be considered in

determining whether products or services are related?

- The method used to distribute the products or provide the services; and- The type or class of customers for the products or services- The nature of the production processes-If applicable, the nature of the regulatory environment eg. Banking, insurance or public utilities

What are the factors that should beconsidered in identifying geographicalsegments?

- Similarity of economic, politicalConditions

- The relationship between operationsin different geographical areas

-Proximity of operations

- Special risks associated withoperations in a particular area

-Exchange control regulations

- The underlying currency risks

Define enterprise revenue?Revenue from sales to external customersas reported in the statement of Profit andLoss.

11. Define segment revenue?- Segment revenue is the aggregate of:- The portion of enterprise revenue that isdirectly attributable to a segment- The relevant portion of enterprise revenuethat can be allocated on a reasonablebasis to a segment, and- Revenue from transactions with othersegment of the enterprise.

What are the items excluded fromsegment revenue?

a. Extra ordinary items as defined in AS5, Net profit or loss for the period,prior period items and changes inaccounting policies.

b. Interest or dividend income

c. Gains on sale of investments

Define segment expense?

-Segment expense is the aggregate of:

- The expense resulting from the operatingactivities of a segment that is directlyattributable to the segment, and

- The relevant portion of enterprise expensesthat can be allocated on a reasonable basis toa segment,

- Including expenses relating to transactionswith other segments of the enterprise.

What are the items excluded fromsegment expenses?

a. Extra ordinary items as defined in AS5, Net profit or loss for the period,prior period items and changes inaccounting policies.

b. Interest expense

c. Losses on sale of investments

d. Income tax expenses

e. General administrative expenses, HOexpenses and other expenses

Define segment assets?Segment assets are those operating assetsthat are employed by a segment in itsoperating activities and that either aredirectly attributable to the segment or canbe allocated to the segment on areasonable basis.

Define segment liabilities?Segment liabilities are those operatingliabilities that results from the operatingactivities of a segment and that either aredirectly attributable to the segment or canbe allocated to the segment on areasonable basis.

What are the factors that influencethe risks and returns of anenterprise?- Geographical location of itsoperations and- By the location of its customers.How to identify reportable segments asprimary and secondary segments?If risks and returns of an enterprise are affectedpredominantly by differences in the products andservices it produces, its primary format forreporting segment information should be businesssegments, with secondary information reportedgeographically. Similarly, if the risks and returns ofthe enterprise are affected predominantly by the factthat it operates in different countries or othergeographical areas, its primary format for reportingsegment information should be geographical segments,with secondary information reported for groups ofrelated products and services.

What are the disclosure requirementsfor primary reporting format?

- An enterprise should disclose the following foreach reportable segment:

a. Segment revenue, classified into segmentrevenue from sales to external customers andsegment revenue from transactions with otherSegments

b. Segment result

c. Total carrying amount of segment assets

d. Total amount of segment liabilities

e. Total cost incurred during the period to acquire