Identifying reportable segments

5.7 Segment 
result is segment revenue less segment expense.
5.8 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.
If the segment result of a segment includes interest or
dividend income, its segment assets include the related
receivables, loans, investments, or other interest or dividend
generating assets.
Segment assets do not include income tax assets.
Segment assets are determined after deducting related allowances/
provisions that are reported as direct offsets in the balance sheet of
the enterprise.
5.9 Segment 
liabilities are those operating liabilities that result 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.
If the segment result of a segment includes interest expense, its 
segment liabilities include the related interest-bearing liabilities.
Segment liabilities do not include income tax liabilities.
5.10 Segment accounting policies are the accounting policies adopted for
preparing and presenting the financial statements of the enterprise
as well as those accounting policies that relate specifically to

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AS 17
6. The factors in paragraph 5 for identifying business segments and
geographical segments are not listed in any particular order.
7. A 
single 
business segment does not include products and services with
significantly differing risks and returns. While there may be dissimilarities
with respect to one or several of the factors listed in the definition of business
segment, the products and services included in a single business segment
are expected to be similar with respect to a majority of the factors.
8. Similarly, a single geographical segment does not include operations in
economic environments with significantly differing risks and returns.
A geographical segment may be a single country, a group of two or
more countries, or a region within a country.
9. The risks and returns of an enterprise are influenced both by the
geographical location of its operations (where its products are produced or
where its service rendering activities are based) and also by the location of
its customers (where its products are sold or services are rendered). The
definition allows geographical segments to be based on either:
(a) the location of production or service facilities and other assets of
an enterprise; or
(b) the location of its customers.
10. The organisational and internal reporting structure of an enterprise
will normally provide evidence of whether its dominant source of geo-
graphical risks results from the location of its assets (the origin of its sales)
or the location of its customers (the destination of its sales). Accordingly,
an enterprise looks to this structure to determine whether its geographical
segments should be based on the location of its assets or on the location of
its customers.
11. Determining the composition of a business or geographical segment
involves a certain amount of judgement. In making that judgement,
enterprise management takes into account the objective of reporting 
financial information by segment as set forth in this Standard and the
qualitative characteristics of financial statements as identified in the
Framework for the Preparation and Presentation of Financial Statements
issued by the Institute of Chartered Accountants of India. The qualitative
characteristics include the relevance, reliability, and comparability over time

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Segment Reporting
243
of financial information that is reported about the different groups of products
and services of an enterprise and about its operations in particular geographical
areas, and the usefulness of that information for assessing the risks and
returns of the enterprise as a whole.
12. The predominant sources of risks affect how most enterprises are
organised and managed. Therefore, the organisational structure of an
enterprise and its internal financial reporting system are normally the basis
for identifying its segments.
13. The definitions of segment revenue, segment expense, segment assets
and segment liabilities include amounts of such items that are directly
attributable to a segment and amounts of such items that can be allocated to
a segment on a reasonable basis. An enterprise looks to its internal financial
reporting system as the starting point for identifying those items that can be
directly attributed, or reasonably allocated, to segments. There is thus a
presumption that amounts that have been identified with segments for internal
financial reporting purposes are directly attributable or reasonably
allocable
to segments for the purpose of measuring the segment revenue, segment
14. In some cases, however, a revenue, expense, asset or liability may
have been allocated to segments for internal financial reporting purposes on
a basis that is understood by enterprise management but that could be deemed
arbitrary in the perception of external users of financial statements. Such
an allocation would not constitute a reasonable basis under the definitions
of segment revenue, segment expense, segment assets, and segment liabilities
in this Standard. Conversely, an enterprise may choose not to allocate some
item of revenue, expense, asset or liability for internal financial reporting
purposes, even though a reasonable basis for doing so exists. Such an item
is allocated pursuant to the definitions of segment revenue, segment expense,
segment assets, and segment liabilities in this Standard.
15. Examples 
of 
segment assets include current assets that are used in the
operating activities of the segment and tangible and intangible fixed assets.
If a particular item of depreciation or amortisation is included in segment
expense, the related asset is also included in segment assets. Segment assets
do not include assets used for general enterprise or head-office purposes.
Segment assets include operating assets shared by two or more segments if
a reasonable basis for allocation exists. Segment assets include goodwill
that is directly attributable to a segment or that can be allocated to a segment

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AS 17
on a reasonable basis, and segment expense includes related amortisation of
goodwill. If segment assets have been revalued subsequent to acquisition,
then the measurement of segment assets reflects those revaluations.
16. Examples of segment liabilities include trade and other payables,
accrued liabilities, customer advances, product warranty provisions, and
other claims relating to the provision of goods and services. Segment
liabilities do not include borrowings and other liabilities that are incurred
for financing rather than operating purposes. The liabilities of segments
whose operations are not primarily of a financial nature do not include
borrowings and similar liabilities because segment result represents an
operating, rather than a net-of-financing, profit or loss. Further, because
debt is often issued at the head-office level on an enterprise-wide basis, it is
often not possible to directly attribute, or reasonably allocate, the interest-
bearing liabilities to segments.
17. Segment revenue, segment expense, segment assets and segment
liabilities are determined before intra-enterprise balances and intra-enterprise
transactions are eliminated as part of the process of preparation of enterprise
financial statements, except to the extent that such intra-enterprise balances
and transactions are within a single segment.
18. While the accounting policies used in preparing and presenting the
financial statements of the enterprise as a whole are also the fundamental
segment accounting policies, segment accounting policies include, in
addition, policies that relate specifically to segment reporting, such as
identification of segments, method of pricing inter-segment transfers, and
basis for allocating revenues and expenses to segments.