AS 17

BY
DR.PRANAV SARASWAT
Short questions:
1. List down the enterprises for
which AS 17 are mandatory?

a. Listing criteria: Enterprises whose equity or debt

securities are listed on a recognized stock
exchange and enterprises that are in the process of
issuing equity or debt securities that will be listed
on a recognized stock exchange in India as
evidenced by the BOD’s resolution in this regard.

b. Turnover criteria: All other commercial industrial

and business reporting enterprises, whose turnover
for the accounting period exceeds Rs. 50 crores.
2. What is the objective of AS 17?

a. Objective of this statement is to establish

the principles for reporting financial
information about the different types of
products and services an enterprises
produces and different geographical areas
in which it operates
3.What are the advantages of segment
information?

a. Segment information helps users of

financial statements:

- Better understand the performance of

the enterprise

- Better access the risks and returns of

the enterprise

- Make more informed judgments about

the enterprise as a whole
4. How the segment information need to be
presented?

If a single financial report contains both

consolidated financial statements and the
separate 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 distinguishable

component of an enterprise:

- That is engaged in providing an

individual product or service or a
group of related products or
services, and

- That is subject to risks and returns that

are different from those of other
business segments.
6. Define geographical segment?

A distinguishable component of a enterprise:

- That is engaged in providing products
or services within a particular economic
environment and,

- That is subject to risks and returns that

are different from those of components
operating in other economic
environments
7. Define reportable segment?

- Reportable segment is a business

segment or a geographical segment

- Identified on the basis of foregoing

Definitions

- For which segment information is

required to be disclosed by this
statement.
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 be
considered in identifying geographical
segments?

- Similarity of economic, political

Conditions

- The relationship between operations

in different geographical areas

-Proximity of operations

- Special risks associated with

operations in a particular area

-Exchange control regulations

 Define enterprise revenue?
Revenue from sales to external customers
as reported in the statement of Profit and
Loss.

11. Define segment revenue?

- 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, and
- Revenue from transactions with other
segment of the enterprise.
What are the items excluded from
segment revenue?

a. Extra ordinary items as defined in AS

5, Net profit or loss for the period,
prior period items and changes in
accounting 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 operating

activities of a segment that is directly
attributable to the segment, and

- The relevant portion of enterprise expenses

that can be allocated on a reasonable basis to
a segment,

- Including expenses relating to transactions

with other segments of the enterprise.
What are the items excluded from
segment expenses?

a. Extra ordinary items as defined in AS

5, Net profit or loss for the period,
prior period items and changes in
accounting policies.

b. Interest expense

c. Losses on sale of investments

d. Income tax expenses

e. General administrative expenses, HO

expenses and other expenses
Define segment assets?
Segment assets are those operating assets
that are employed by a segment in its
operating activities and that either are
directly attributable to the segment or can
be allocated to the segment on a
reasonable basis.

Define segment liabilities?

Segment liabilities are those operating
liabilities that results from the operating
activities of a segment and that either are
directly attributable to the segment or can
be allocated to the segment on a
reasonable basis.
What are the factors that influence
the risks and returns of an
enterprise?
- Geographical location of its
operations and
- By the location of its customers.
How to identify reportable segments as
primary and secondary segments?
If risks and returns of an enterprise are affected
predominantly by differences in the products and
services it produces, its primary format for
reporting segment information should be business
segments, with secondary information reported
geographically. Similarly, if the risks and returns of
the enterprise are affected predominantly by the fact
that it operates in different countries or other
geographical areas, its primary format for reporting
segment information should be geographical segments,
with secondary information reported for groups of
related products and services.
What are the disclosure requirements
for primary reporting format?

- An enterprise should disclose the following for

each reportable segment:

a. Segment revenue, classified into segment

revenue from sales to external customers and
segment revenue from transactions with other
Segments

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