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As 17 - Quick Revision

Accounting Standard 17 focuses on segment reporting, providing information about different products/services and geographical operations to help users assess enterprise performance and risks. It outlines the types of segments (business and geographical), definitions of key terms, and thresholds for reportable segments, including revenue, profit/loss, and asset tests. The standard emphasizes full compliance and management's discretion in designating reportable segments.

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8 views2 pages

As 17 - Quick Revision

Accounting Standard 17 focuses on segment reporting, providing information about different products/services and geographical operations to help users assess enterprise performance and risks. It outlines the types of segments (business and geographical), definitions of key terms, and thresholds for reportable segments, including revenue, profit/loss, and asset tests. The standard emphasizes full compliance and management's discretion in designating reportable segments.

Uploaded by

saadnoor0554
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Accounting Standard 17: Segment Reporting - Quick Revision

1. Introduction
o Segment Information: Information about different products/services and geographical
operations is segment information.
o Objective: Helps users understand enterprise performance, assess risks and returns, and
make informed judgments.

2. Scope: Full compliance required; not selective.

3. Types of Segments:
1. Business Segment:
o Distinguishable component of an enterprise.
o Engaged in providing individual or related products/services.
o Subject to unique risks and returns.
o Determined by factors: nature of products, production methods, customer types,
distribution methods, regulatory environment.
o Includes products/services with similar characteristics.
o Excludes products/services with significantly differing risks and returns.

2. Geographical Segment:
o Distinguishable component within an enterprise.
o Provides products/services in a specific economic environment.
o Subject to distinct risks and returns compared to other economic areas.
o Factors for identification: economic and political conditions, relationships between
operations, special risks control regulations, currency risks.
o Excludes operations in environments with significantly differing risks and returns.

4. Definition of Terms:
o Segment Revenue: Includes direct/allocated revenue and inter-segment transactions,
excluding extraordinary items, interest/dividend income, and gains on investments.
o Segment Expenses: Includes direct/allocated expenses and inter-segment transactions,
excluding extraordinary items, interest expense, losses on investments, and income tax
expense.
o Segment result: segment revenue - segment expense
5. Thresholds for Reportable Segments:
o Revenue Test: 10% or more of total segment revenue.
o Profit/Loss Test: 10% or more of total profit or loss, whichever is greater.
o Asset Test: 10% or more of total assets.

Discretionary Designation: Management discretion to designate a segment as reportable.

o Overall Test 75% Rule for Reportable Segments


- Ensure that reportable segments contribute at least 75% of total enterprise revenue.
- If not met, additional segments should be identified, regardless of the 10%
thresholds, until 75% of total enterprise revenue is covered.

Important Notes:
1. A segment meeting 10% thresholds in the prior period remains reportable, even if current
revenue, result, and assets fall below 10%.
2. When a segment qualifies in the current period, prior period data should be restated to
reflect the new reportable status, even if it didn't meet 10% thresholds previously.

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