This document outlines accounting standards for segment reporting. It defines segment reporting as a convention where companies report financial information by business sector, such as revenues, profits, and losses for agriculture, mining, and manufacturing individually. This allows companies to show investors the performance of different parts of their business. It also prevents one overperforming or underperforming sector from unduly influencing overall financial statements. The standards provide requirements for segment reporting, including identifying service and geographical segments, using consistent accounting policies, and restating prior period data for newly identified segments where practicable.
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Accounting Standard (AS) 17 Segment Reporting: Objective
This document outlines accounting standards for segment reporting. It defines segment reporting as a convention where companies report financial information by business sector, such as revenues, profits, and losses for agriculture, mining, and manufacturing individually. This allows companies to show investors the performance of different parts of their business. It also prevents one overperforming or underperforming sector from unduly influencing overall financial statements. The standards provide requirements for segment reporting, including identifying service and geographical segments, using consistent accounting policies, and restating prior period data for newly identified segments where practicable.
This document outlines accounting standards for segment reporting. It defines segment reporting as a convention where companies report financial information by business sector, such as revenues, profits, and losses for agriculture, mining, and manufacturing individually. This allows companies to show investors the performance of different parts of their business. It also prevents one overperforming or underperforming sector from unduly influencing overall financial statements. The standards provide requirements for segment reporting, including identifying service and geographical segments, using consistent accounting policies, and restating prior period data for newly identified segments where practicable.
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Accounting Standard (AS) 17 Segment Reporting: Objective
This document outlines accounting standards for segment reporting. It defines segment reporting as a convention where companies report financial information by business sector, such as revenues, profits, and losses for agriculture, mining, and manufacturing individually. This allows companies to show investors the performance of different parts of their business. It also prevents one overperforming or underperforming sector from unduly influencing overall financial statements. The standards provide requirements for segment reporting, including identifying service and geographical segments, using consistent accounting policies, and restating prior period data for newly identified segments where practicable.
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Accounting Standard (AS) 17
Segment Reporting (This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of its objective and the General Instructions contained in part A of the Annexure to the Notification.) This Accounting Standard is not mandatory for Small and Medium Sized Companies, as defined in the Notification. Such companies are however encouraged to comply with the Standard.
Objective 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. 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. Scope 1. This Standard should be applied in presenting general purpose financial statements. 238 AS 17 2. The requirements of this Standard are also applicable in case of consolidated financial statements. 3. An enterprise should comply with the requirements of this Standard fully and not selectively. 4. If a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. In the context of reporting of segment information in consolidated financial statements, the references in this Standard to any financial statement items should construed to be the relevant item as appearing in the consolidated financial statements.
Segment Reporting A convention some companies use in their financial statements in which they report information by sector. For example, a single publicly-traded company that engages in agriculture, mining, and manufacturing may report revenue, sales, and profits/losses for each field individually. This allows a company to show its investors what parts of the company are performing better relative to the others. It also prevents one sector that is overperforming or underperforming from unduly influencing a financial statement
segment reporting A type of financial reporting in which a firm discloses information by identifiable industry segments. For example, Procter & Gamble reports revenues, income, assets, depreciation, and capital expenditures for each of three segments: beauty and health, household products, and Gillette. Segment reporting is required by the SEC as part of its attempt to provide stockholders and the public with better financial data. Also called line-of-business reporting
Service Segments and Geographical Segments
15. The types of segments reported to the governing body and senior manager of an entity are frequently referred to as “service segments” or “geographical segments”. These terms are used in this Standard with the following meanings: (a) A “service segment” refers to a distinguishable component of an entity that is engaged in providing related outputs or achieving particular operating objectives consistent with the overall mission of each entity; and (b) A “geographical segment” is a distinguishable component of an entity that is engaged in providing outputs or achieving particular operating objectives within a particular geographical area. 16. Government departments and agencies are usually managed along service lines because this reflects the way in which major outputs are identified, their achievements monitored and their resources needs identified and budgeted. An example of an entity which reports internally on the basis of service lines or service segments is an education department whose organisational structure and internal reporting system reflects primary, secondary and tertiary educational activities and outputs as separate segments. This basis of segmentation may be adopted internally because the skills and facilities necessary to deliver the desired outputs and outcomes for each of these broad educational activities are perceived to be different. In addition, key financial decisions faced by management include determination of the resources to allocate to each of those outputs or activities. In these cases, it is likely that reporting externally on the basis of service segments will also satisfy the requirements of this Standard.
Multiple Segmentation 21. In some cases, an entity may report to the governing body and senior manager segment revenue, expense, assets and liabilities on the basis of more than one segment structure, for example by both service and geographical segments. Reporting on the basis of both service segments and geographical segments in the external financial statements often will provide useful information if the achievement of an entity’s objectives is strongly affected both by the different products and services it provides and the different geographical areas to which those goods and services are provided. Similarly, at the whole-of-Government level, Government may adopt a basis of disclosure which reflects general Government, public finance sector and trading sector disclosures, and supplement the general Government sector analysis with, for example, segment disclosures of major purpose or functional sub-categories. In these case, the segments may be reported separately or as a matrix. In addition, a primary and secondary segment reporting structure may be adopted with only limited disclosures mad
Segment Accounting Policies
40. Segment information should be prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the consolidated group or entity. 41. There is a presumption that the accounting policies that the governing body and management of an entity have chosen to use in preparing the consolidated or entity-wide financial statements are those that the governing body and management believe are the most appropriate for external reporting purposes. Since the purpose of segment information is to help users of financial statements better understand and make more informed judgements about the entity as a whole, this Standard requires the use, in preparing segment information, of the accounting policies that the governing body and management have chosen for preparation of the consolidated or entity-wide financial statements. That does not mean, however, that the consolidated or entity accounting policies are to be applied to segments as if the segments were separate reporting entities. A detailed calculation done in applying a particular accounting policy at the entity-wide level may be allocated to segments if there is a reasonable basis for doing so. Employee entitlement calculations, for example, are often done for an entity as a whole, but the entity-wide figures may be allocated to segments based on salary and demographic data for the segments.
Newly Identified Segments
46. If a segment is identified as a segment for the first time in the current period, prior period segment data that is presented for comparative purposes should be restated to reflect the newly reported segment as a separate segment, unless it is impracticable to do so. 47. New segments may be reported in financial statements in differing circumstances. For example, an entity may change its internal reporting structure from a service segment structure to a geographical segment structure and management may consider it appropriate that this segment structure also be adopted for external reporting purposes. An entity may also undertake significant new or additional activities, or increase the extent to which an activity previously operating as an internal support service provides services to external parties. In these cases, new segments may be reported for the first time in the general purpose financial statements. Where this occurs, this Standard requires that prior period comparative data should be restated to reflect the current segment structure where practicable.
