A
B
C
D
E
F
G
H Total (Segments) Total (Enterprise)
3. SEGMENT RESULT
5 (90) 15 (5) 8 (5) 5 7
[Profit/(Loss)]
4. Combined Result of all
5
15
8
5
7
40
Segments in profits
5.
Combined Result of all
(90)
(5)
(5)
(100)
Segments in loss
6. Segment Result as a
5
90
15
5
8
5
5
7
percentage of the greater
of the totals arrived at 4 and
5 above
in absolute amount
(i.e., 100)
7. SEGMENT ASSETS
15 47 5 11 3 5 5 9
100
8. Segment assets as a
15
47
5
11
3
5
5
9
percentage
of total assets
of all segments
The reportable segments of the enterprise will be identified as below:
(a) In accordance with paragraph 27(a), segments whose total revenue from external sales and inter-segment sales is
10% or more of the total revenue of all segments, external and internal, should be identified as reportable segments.
Therefore, Segments A and B are reportable segments.
(b) As per the requirements of paragraph 27(b), it is to be first identified whether the combined result of all segments
in profit or the combined result of all segments in loss is greater in absolute amount.
From the table, it is evident
that combined result in loss (i.e., Rs.100,000) is greater. Therefore, the individual segment result as a percentage
of Rs.100,000 needs to be examined. In accordance with paragraph 27(b), Segments B and C are reportable
segments as their segment result is more than the threshold limit of 10%.
(c) Segments A, B and D are reportable segments as per paragraph 27(c), as their segment assets are more than 10%
of the total segment assets.
Thus,
Segments A, B, C and D are reportable segments in terms of the criteria laid down in paragraph 27.
Paragraph 28 of the Standard gives an option to the management of the enterprise to designate any segment as a reportable
segment. In the given case, it is presumed that the management decides to designate Segment E as a reportable segment.
Paragraph 29 requires that if total external revenue attributable to reportable segments identified as aforesaid constitutes
less than 75% of the total enterprise revenue, additional segments should be identified as reportable segments even if they
do not meet the 10% thresholds in paragraph 27, until at least 75% of total enterprise revenue is included in reportable
segments.
The total external revenue of Segments A, B, C, D and E, identified above as reportable segments, is Rs.295,000. This is
less than 75% of total enterprise revenue of Rs.400,000. The management of the enterprise is required to designate any
one or more of the remaining segments as reportable segment(s) so that the external revenue of reportable segments is
at least 75% of the total enterprise revenue. Suppose, the management designates Segment H for this purpose. Now
the external revenue of reportable segments is more than 75% of the total enterprise revenue.
Segments A, B, C, D, E and H are reportable segments. Segments F and G will be shown as reconciling items.