Page 2 of 3 FirstFirst 123 LastLast
Results 11 to 20 of 21

Thread: 17 Accounting Standard 17 - Segment Reporting - AS 17

  1. #11
    Accounting Standards
    Guest

    Default Primary Reporting Format of Accounting Standard 17 - Segment Reporting - AS 17

    Primary Reporting Format of Accounting Standard 17 - Segment Reporting - AS 17


    39. The disclosure requirements in paragraphs 40-46 should be applied to each reportable segment based on primary reporting format of an enterprise.


    40. 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 segment assets that are expected to be used during more than one period (tangible and intangible fixed assets);

    (f) total amount of expense included in the segment result for depreciation and amortisation in respect of segment assets for the period; and


    (g) total amount of significant non-cash expenses, other than depreciation and amortisation in respect of segment assets, that were included in segment expense and, therefore, deducted in measuring segment result.

    41. Paragraph 40 (b) requires an enterprise to report segment result. If an enterprise can compute segment net profit or loss or some other measure of segment profitability other than segment result,without arbitrary allocations, reporting of such amount(s) in addition to segment result is encouraged. If thatmeasure is prepared on a basis other than the accountingpolicies adopted
    for the financial statements of the enterprise, the enterprisewill include in its financial statements a clear description of the basis of measurement.

    42. An example of a measure of segment performance above segment result in the statement of profit and loss is gross margin on sales. Examples of measures of segment performance below segment result in the statement of profit and loss are profit or loss from ordinary activities (either before or after income taxes) and net profit or loss.


    43. Accounting Standard 5, ‘Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies’ requires that “when items of income and expense within profit or loss fromordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately”. Examples of such items includewritedowns of inventories, provisions for restructuring, disposals of fixed assets and long-terminvestments, legislative changes having retrospective application, litigation settlements, and reversal of provisions. An enterprise is encouraged, but not required, to disclose the nature and amount of any items of segment revenue and segment expense that are of such size, nature, or incidence that their disclosure is relevant to explain the performance of the segment for the period. Such disclosure is not intended to change the classification of any such items of revenue or expense fromordinary to extraordinary or to change
    the measurement of such items. The disclosure, however, does change the level at which the significance of such items is evaluated for disclosure purposes from the enterprise level to the segment level.

    44. An enterprise that reports the amount of cash flows arising from operating, investing and financing activities of a segment need not disclose depreciation and amortisation expense and non-cash expenses of such segment pursuant to sub-paragraphs (f) and (g) of paragraph 40.


    45. AS 3, Cash Flow Statements, recommends that an enterprise present a cash flow statement that separately reports cash flows from operating, investing and financing activities. Disclosure of information regarding operating, investing and financing cash flows of each reportable segment is
    relevant to understanding the enterprise’s overall financial position, liquidity, and cash flows. Disclosure of segment cash flow is, therefore, encouraged, though not required. An enterprise that provides segment cash flow disclosures need notdisclose depreciation and amortisation expense and noncash expenses pursuant to sub-paragraphs (f) and (g) of paragraph 40.


    46. An enterprise should present a reconciliation between the information disclosed for reportable segments and the aggregated information in the enterprise financial statements. In presenting the
    reconciliation, segment revenue should be reconciled to enterprise revenue; segment result should be reconciled to enterprise net profit or loss; segment assets should be reconciled to enterprise assets; and segment liabilities should be reconciled to enterprise liabilities.

  2. #12
    Accounting Standards
    Guest

    Default Secondary Segment Information of Accounting Standard 17 - Segment Reporting - AS 17

    Secondary Segment Information of Accounting Standard 17 - Segment Reporting - AS 17


    47. Paragraphs 39-46 identify the disclosure requirements to be applied to each reportable segment based on primary reporting format of an enterprise. Paragraphs 48-51 identify the disclosure requirements to be applied to each reportable segment based on secondary reporting format of an enterprise, as follows:


    (a) if primary format of an enterprise is business segments, the required secondary-format disclosures are identified in paragraph 48;

    (b) if primary format of an enterprise is geographical segments based on location of assets (where the products of the enterprise are produced or where its service rendering operations are based),
    the required secondary-format disclosures are identified in paragraphs 49 and 50;

    (c) if primary format of an enterprise is geographical segments based on the location of its customers (where its products are sold or services are rendered), the required secondary-format disclosures are identified in paragraphs 49 and 51.

    48. If primary format of an enterprise for reporting segment information is business segments, it should also report the following information:


    (a) segment revenue from external customers by geographical area based on the geographical location of its customers, for each geographical segment whose revenue from sales to external customers is 10 per cent or more of enterprise revenue;


    (b) the total carrying amount of segment assets by geographical location of assets, for each geographical segment whose segment assets are 10 per cent or more of the total assets of
    all geographical segments; and

    (c) the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets) by geographical location
    of assets, for each geographical segment whose segment assets are 10 per cent or more of the total assets of all geographical segments.


    49. If primary format of an enterprise for reporting segment information is geographical segments (whether based on location of assets or location of customers), it should also report the following segment information for each business segment whose revenue from sales to external customers is
    10 per cent or more of enterprise revenue or whose segment assets are 10 per cent or more of the total assets of all business segments:

    (a) segment revenue from external customers;

    (b) the total carrying amount of segment assets; and

    (c) the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets).


    50. If primary format of an enterprise for reporting segment information is geographical segments that are based on location of assets, and if the location of its customers is different from the location of its assets, then the enterprise should also report revenue from sales to external customers for each customer-based geographical segment whose revenue from sales to external customers is 10 per cent or more of enterprise revenue.


    51. If primary format of an enterprise for reporting segment information is geographical segments that are based on location of customers, and if the assets of the enterprise are located in different geographical areas from its customers, then the enterprise should also report the following
    segment information for each asset-based geographical segment whose revenue from sales to external customers or segment assets are 10 per cent or more of total enterprise amounts:

    (a) the total carrying amount of segment assets by geographical location of the assets; and

    (b) the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets) by location of the assets.

  3. #13
    Accounting Standards
    Guest

    Default Illustrative Segment Disclosures of Accounting Standard 17 - Segment Reporting - AS 17

    Illustrative Segment Disclosures of Accounting Standard 17 - Segment Reporting - AS 17


    52. Appendix III to this Statement presents an illustration of the disclosures for primary and secondary formats that are required by this Statement.

  4. #14
    Accounting Standards
    Guest

    Default Other Disclosures of Accounting Standard 17 - Segment Reporting - AS 17

    Other Disclosures of Accounting Standard 17 - Segment Reporting - AS 17

    53. In measuring and reporting segment revenue from transactions with other segments, inter-segment transfers should be measured on the basis that the enterprise actually used to price those transfers. The basis of pricing inter-segment transfers and any change therein should be disclosed in the financial statements.


    54. Changes in accounting policies adopted for segment reporting that have a material effect on segment information should be disclosed. Such disclosure should include a description of the nature of the change, and the financial effect of the change if it is reasonably determinable.


    55. AS 5 requires that changes in accounting policies adopted by the enterprise should bemade only if required by statute, or for compliancewith an accounting standard, or if it is considered that the change would result in a more appropriate presentation of events or transactions in the financial
    statements of the enterprise.


    56. Changes in accounting policies adopted at the enterprise level that affect segment information are dealt with in accordance with AS 5. AS 5 requires that any change in an accounting policy which has a material effect should be disclosed.The impact of, and the adjustments resultingfrom, such change, ifmaterial, should be shown in the financial statements of the period in which such change is made, to reflect the effect of such change. Where the effect of such change is not ascertainable, wholly or in part, the fact should be indicated. If a change ismade in the accounting policieswhich has nomaterial effect on the financial statements for the current period but which is
    reasonably expected to have a material effect in later periods, the fact of such change should be appropriately disclosed in the period in which the change is adopted.

    57. Some changes in accounting policies relate specifically to segment reporting. Examples include changes in identification of segments and changes in the basis for allocating revenues and expenses to segments. Such changes can have a significant impact on the segment information reported but will not change aggregate financial information reported for the enterprise. To enable users to understand the impact of such changes, this Statement requires the disclosure of the nature of the change and the financial effect of the change, if reasonably determinable.


    58. An enterprise should indicate the types of products and services included in each reported business segment and indicate the composition of each reported geographical segment, both primary and secondary, if not otherwise disclosed in the financial statements.


    59. To assess the impact of such matters as shifts in demand, changes in the prices of inputs or other factors of production, and the development of alternative products and processes on a business segment, it is necessary to know the activities encompassed by that segment. Similarly, to assess the impact of changes in the economic and political environment on the risks and returns of a geographical segment, it is important to knowthe composition of that geographical segment.

  5. #15
    Accounting Standards
    Guest

    Default Appendix of Accounting Standard 17 - Segment Reporting - AS 17

    Appendix of Accounting Standard 17 - Segment Reporting - AS 17

    Click Here For Appendix

    http://www.knowledgebible.com/forum/...ment-Reporting

  6. #16
    Accounting Standards
    Guest

    Default Accounting Standards Interpretation 22 - Treatment of Interest for determining Segment Expense of AS 17

    Accounting Standards Interpretation (ASI) 22


    Treatment of Interest for determining Segment Expense

    Accounting Standard (AS) 17, Segment Reporting

    [Pursuant to the issuance of this Accounting Standards Interpretation, General Clarification (GC)
    – 14/2002, issued in October 2002, stands withdrawn.]



    ISSUES

    1. Whether interest expense relating to overdrafts and other operating liabilities identified to a particular segment should be included in the segment expense or not.


    2. Another issue is that in case interest is included as a part of the cost of inventories where it is so required as per Accounting Standard (AS) 16, Borrowing Costs, read with Accounting Standard (AS) 2, Valuation of Inventories, and those inventories are part of segment assets of a particular segment, whether such interest would be considered as a segment expense.

  7. #17
    Accounting Standards
    Guest

    Default Treatment of Interest for determining Segment Expense of Accounting Standard 17 - Segment Reporting - AS 17

    Accounting Standards Interpretation (ASI) 22 of Accounting Standard 17 - Segment Reporting - AS 17

    Treatment of Interest for determining Segment Expense

    Accounting Standard (AS) 17, Segment Reporting


    [Pursuant to the issuance of this Accounting Standards Interpretation, General Clarification (GC) – 14/2002, issued in October 2002, stands withdrawn.]


    ISSUES

    1. Whether interest expense relating to overdrafts and other operating liabilities identified to a particular segment should be included in the segment expense or not.


    2. Another issue is that in case interest is included as a part of the cost of inventories where it is so required as per Accounting Standard (AS) 16, Borrowing Costs, read with Accounting Standard (AS) 2, Valuation of Inventories, and those inventories are part of segment assets of a particular segment, whether such interest would be considered as a segment expense.

    CONSENSUS

    3. The interest expense relatingto overdrafts and other operatingliabilities identified to a particular segment should not be included as a part of the segment expense unless the operations of the segment are primarily of a financial nature or unless the interest is included as a part of the cost
    of inventories as per paragraph 4 below.


    4. In case interest is included as a part of the cost of inventories where it is so required as per AS 16, read with AS 2, Valuation of Inventories, and those inventories are part of segment assets of a particular segment, such interest should be considered as a segment expense. In this case, the amount of such interest and the fact that the segment result has been arrived at after considering such interest should be disclosed by way of a note to the segment result.


    BASIS FOR CONCLUSIONS


    5. The definition of the term “segment expense” (paragraph 5) contained in AS 17 does not include, inter alia, “interest expense, including interest incurred on advances or loans from other segments, unless the operations of the segment are primarily of a financial nature.” Accordingly, the interest expense relating to overdrafts and other operating liabilities identified to a particular segment is not included as a part of the segment expense unless the operations of the segment are primarily of a financial nature or unless the interest is included as a part of the cost of inventories as per
    paragraph 4 above.


    6. According to AS 16, read with AS 2, interest can be added to the cost of inventories only where time is the major factor in bringing about a change in the condition of inventories. Change in the condition of inventories is an operational activity.Accordingly, such interest is resultingfromthe operating activities of the segment in respect of which such inventories constitute the segment asset. The definition of ‘segment expense’ under AS 17 comprises, inter alia, “the expense resulting from the operating activities of a segment that is directly attributable to the segment.” Accordingly, interest on such inventories should be considered as a segment expense.The clause excluding
    the interest expense in the definition of ‘segment expense’ (see paragraph 5 above) does not apply to such interest.

  8. #18
    Accounting Standards
    Guest

    Default Disclosure of Segment Information of Accounting Standard 17 - Segment Reporting - AS 17

    Accounting Standards Interpretation (ASI) 20
    (Revised)

    Disclosure of Segment Information of Accounting Standard 17 - Segment Reporting - AS 17

    Accounting Standard (AS) 17, SegmentReporting


    ISSUE

    1. Whether an enterprise, which has neither more than one business segment nor more than one geographical segment, is required to disclose segment information as per AS 17.


    CONSENSUS

    2. In case by applying the definitions of ‘business segment’ and ‘geographical segment’, contained in AS 17, it is concluded that there is neither more than one business segment nor more than one geographical segment, segment information as per AS 17 is not required to be disclosed. However, the fact that there is only one ‘business segment’and ‘geographical segment’ should be disclosed by way of a note.

    BASIS FOR CONCLUSIONS

    3. The paragraph of AS 17 dealing with ‘Objective’ provides as under: “The objective of this Statement 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. Such information helps users of financial statements:

    (a) better understand the performance of the enterprise;

    (b) better assess the risks and returns of the enterprise; and

    (c) make more informed judgements about the enterprise as a whole.

    Many enterprises provide groups of products and services or operate in geographical areas that are subject to differing rates of profitability, opportunities for growth, future prospects, and risks. Information about different types of products and services of an enterprise and its operations in different geographical areas - often called segment information - is relevant to assessing the risks and returns of a diversified or multi-locational enterprise but may not be determinable from the
    aggregated data. Therefore, reporting of segment information is widely regarded as necessary for meeting the needs of users of financial statements.”

    In case of an enterprise, which has neither more than one business segment normore than one geographical segment, the relevant information is available from the balance sheet and statement of profit and loss itself and, therefore, keeping in view the objective of segment reporting, such an enterprise is not required to disclose segment information as per AS 17. The disclosure of the fact that there is only one ‘business segment’ and ‘geographical segment’ and, therefore, the segment information is not provided by the concerned enterprise is useful for the users of the financial statements while making a comparison among various enterprises.

  9. #19
    Accounting Standards
    Guest

    Default ANNOUNCEMENT Disclosure of corresponding previous year figures in the first year of application of Accounting Standard 17 - AS 17

    ANNOUNCEMENT
    Disclosure of corresponding previous year figures in the first year of application of Accounting Standard (AS) 17, Segment Reporting
    The Institute has issued Accounting Standard (AS) 17, Segment Reporting (published in the October, 2000, issue of the Institute's Journal 'The Chartered Accountant'). AS 17 has come into effect in respect of accounting periods commencing on or after 1-4-2001 and is mandatory in nature, from that date, in respect of the following:
    1. Enterprises whose equity or debt securities are listed on a recognised stock exchange in India, and enterprises that are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India as evidenced by the board of directors' resolution in this regard.
    2. All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs. 50 crores.
    The Council, at its 224th meeting, held on March 8-10, 2002, considered the matter relating to disclosure of corresponding previous year figures in respect of segment reporting in the first year of application of AS 17. The Council decided that in the first year of application of AS 17, corresponding previous year figures in respect of segment reporting need not be disclosed.

  10. #20
    Accounting Standards
    Guest

    Default Applicability of Accounting Standard 17, ‘Segment Reporting’, to a warehousing corporation - AS 17

    Applicability of Accounting Standard (AS) 17, ‘Segment Reporting’, to a warehousing corporation

    A. Facts of the Case

    1. A public sector undertaking was formed by an Act of Parliament (The Warehousing Corporations Act, 1962) for the purpose of warehousing of agricultural produce and certain other commodities and for other matters connected therewith. Accordingly, the undertaking has been resorting to construction, hiring and operation of warehouses throughout the length and breadth of the country for storage of goods. Since the storage requirements, both in covered space and in open, vary from commodity to commodity and depositor/customer to depositor/customer, the corporation, for the purposeof convenience and also to meet the requirements of other agencies, viz., the Customs, has categorized the warehouses as below:

    (a) General Warehouses: All indigenous/duty paid commodities are warehoused/ stored in these warehouses other than those mentioned at (b), (c) and (d) below.

    (b) Bonded Warehouses: These warehouses are for warehousing / storage of imported consignments (as per the provisions of the Customs Act, 1962) till such time the importer (bonder) deposits the customs duty and seeks release of the consignment. The undertaking gets a licence from the Customs for this purpose.

    (c) CFS/ICD Warehouses: These are known as Container Freight Stations (CFS) and Inland Clearance Depots (ICD) wherein exportable/imported commodities transported through ISO containers are warehoused/stored.

    (d) Management Warehouses: In respect of these warehouses, the undertaking acts as a warehouse keeper/custodian within the premises of the importer/customer and goods are released from the custodianship of the undertaking to the user as per their demand.

    2. Irrespective of the nature of commodity stored and the type of warehouse in which it is stored, the line of activity performed by the undertaking is nothing but warehousing. Insofar as other ancillary services are concerned, it also undertakes marketing facilitation operations in the form of loading, unloading, book-keeping and transportation of goods offered for storage, on the request of depositors, who choose not to undertake such services on their own.

    3. The operations of the corporation are being managed by 17 Regional Offices and 16 Construction Cells all over the country. The Regional Offices look after the administrative control/marketing operations and the Construction Cells look after the construction/repairs and maintenance of warehouses.

    4. The querist has stated that since the line of activity of the corporation is warehousing and ancillary activities in terms of the Act, the works performed by the corporation are inter-related. Even though the corporation is in a position to maintain accounts of income separately, the expenditure as well as assets and liabilities cannot be separated/ allocated judiciously until and unless it resorts to arbitrary allocations which, according to the querist, are not permitted as per the provisions of Accounting Standard (AS) 17, ‘Segment Reporting’, issued by the Institute of Chartered Accountants of India

    Since the same warehouse premises, establishment and other facilities are being used for warehousing, be it general goods warehousing, customs bonded goods warehousing and CFS/ICD warehousing, it is not possible to segregate the operation-wise expenditure, assets and liabilities as required by AS 17.

    5. The querist has stated that in compliance with AS 17, however, the corporation has given a note in the audited accounts for the year 2001-02 in

    ‘Notes forming part of accounts’ as under:

    "The Corporation has only one line of business which it is performing in only one geographical location and as such has no separate reportable segment".

    However, C&AG of India, during the course of their audit for the year ending 31.3.2002, have observed that this disclosure is not in conformity with AS 17 on the following grounds:

    (a) Since the business of Container Freight Stations/Inland Container Depots is being governed by the provisions of the Customs Act and other regulated authorities of Government of India, and the business of warehousing agricultural produce and other commodities is governed by the Warehousing Act, the above two are different segments in terms of the requirements of AS 17.



    (b) As the revenue from General Warehouses, Bonded Warehouses/ CFS & ICD exceeds 10% individually, they are Reportable Segments as per AS 17 and, as such, segment-wise results should h a ve b e e n s e p a r at e l y d is c l o s ed i n t er ms o f ma n d at o r y requirements of AS 17.

    6. As per the querist, insofar as C&AG’s observation at paragraph 5(a) above is concerned, the undertaking is engaged in providing ‘Warehousing and Ancillary Services’, which is within the purview of provisions of the Warehousing Corporations Act, 1962. The fact that commodities warehoused are being categorized as General/Bonded/Containerised cargo does not change the basic concept of warehousing and is not subject to varying risks and returns. The querist has emphasised that the Container Freight Stations/ Inland Clearance Depots/Bonded warehouses are operated by the corporation as warehouses. However, some of the warehouses are notified by the Customs to be operated as such, for purposes of storage of cargo and collection of customs duty thereon, prior to release. By invoking provisions of the Customs Act, 1962, the basic concept of warehousing does not change.

    7. The querist has further stated that, insofar as the C&AG’s observation at paragraph 5(b) above is concerned, it is of the view that the intention of AS 17 is to broadly report on distinguishable business segments in totality by indicating clearly:

    (a) Segment Revenue

    (b) Segment Result

    (c) Segment Assets

    (d) Segment Liabilities

    The querist is of the view that keeping in view the fact that the nature of activity in all cases remains as warehousing only, i.e., the corporation has only one line of business, the provisions of AS 17, relating to business segment, are not applicable.

    B . Query

    8. The querist has sought the opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India, in the light of the afore- mentioned facts, on the following issues:

    (a) Since the CFS/ICD warehouses operated by the undertaking, which is governed by the Warehousing Corporations Act, 1962, are under licence from Customs as custodian of goods, whether

    it would be appropriate to treat it as a separate reportable segment as defined in AS 17, especially in view of the fact that the activity performed at these units is warehousing only.

    (b) Whether it is mandatory for the undertaking to present segment report despite the fact that the corporation has only one line of business, i.e., warehousing, wherein expenditure, assets and liabilities are indistinguishable, unless arbitrary allocations are resorted to.

    (c) Since the corporation is presently operating regional offices at 17 places within the country, whether their operation would invite the applicability of segment reporting based on geographical location. The querist has stated that it may be pertinent to mention that the number of regional offices may increase or decrease depending upon the need of the corporation

    D. Opinion

    On the basis of the above, the Committee is of the following opinion on the issues raised by the querist in paragraph 8 above:

    (a) It would not be appropriate to treat CFS/ICD warehouses operated by the undertaking, which is governed by the Warehousing Corporations Act, 1962, and are under licence from customs as custodian of goods, as a separate business segment from general/ containerised warehouses since as stated by the querist the services rendered by them are not subject to differing risks and returns, presumably, as per the criteria laid down in the definition of the term ‘business segment’ in AS 17. However, insofar as the ‘management warehouses’ are concerned, the criteria prescribed in the definition should be considered for deciding whether the risks and returns of such warehouses differ from other warehouses. Similarly, the criteria prescribed in the definition of the term ‘business segment’ should be applied in determining whether the risks and returns pertaining to the warehousing business differ from the risks and returns pertaining to the ancillary business.

    (b) In case it is concluded, as per (a) above, that the corporation has only one business segment, the corporation is not required to present segment information as per AS 17. However, in case it is concluded that the corporation has more than one business segment, segment information is required to be given as per the various requirements of AS 17.

    (c) The mere fact that the corporation is operating regional offices at 17 places within the country does not mean that the regional offices would constitute separate geographical segments within the meaning of AS 17 unless the risks and returns pertaining thereto differ from each other.



    1 Opinion finalised by the Committee on 28.5.2003.

    2 This GC has now been issued in the form of Accounting Standards Interpretation
    (ASI) 20, ‘Disclosure of Segment Information’.

Tags for this Thread

Bookmarks

Posting Permissions

  • Register / Login to post new threads
  • Register / Login to post replies
  • Register / Login to post attachments
  • You may not edit your posts
  •