AS-17 – Segment Reporting :
The objective of this standard is to establish principles for reporting financial information, about the different types of products and services an enterprise produces and the different geographical areas in which it operates.
The standard is applied in presenting general purpose financial statements. The dominant source and nature of risks and returns of an enterprise should govern whether its primary segment reporting format will be business segments or geographical segments. If the 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 or related products and services.
Internal organisation and management structure of an enterprise and its system of internal financial reporting to the board of directors and the chief executive officer should normally be the basis for identifying the predominant source and nature of risks and differing rates of return facing the enterprise. Business and geographical segments of an enterprise for external reporting purposes should be those organizational units for which information is reported to the board of directors and to the chief executive officer for the purpose of evaluating the units performance and for making decisions about future allocation of resources.
A business segment or geographical segment should be identified as a reportable segment if (a) its revenue from sales to external customers and from transactions with other segment is 10 per cent or more of the total revenue, external and internal of all segments; or (b) its segment result, whether profit or loss is 10 per cent or more of (i) the combined result of all segments in profits or (ii) the combined results of all segments in loss which is greater in absolute amount; or (c) its segment assets are 10 per cent or more of the total assets of all segments.
A segment identified as a reportable segment in the immediately preceeding period because it satisfied the relevant 10 per cent thresholds should continue to be a reportable segment for the current period notwithstanding that its revenue result and asset all no longer meet the 10 per cent thresholds. If a segment is identified as a reportable segment in the current period because it satisfies the relevant 10 per cent thresholds, preceeding period segment data that is presented for comparative purposes should, unless it is impracticable to do so, be restated to reflect the newly reportable segment as a separate segment, even if that segment did not satisfy the 10 per cent thresholds in the preceeding period.
Segment information should be prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the enterprise as a whole. Assets and liabilities that relate jointly to two or more segments if, and only if, their related revenues and expenses also are allocated to those segments.