Educational Material on Ind AS 108 Operating Segments

Ind AS 108 Operating Segments :  Ind AS 108 Under international financial reporting standards, an operating segment is a component of an entity that is a profit centre, that has discrete financial information available, and whose results are reviewed regularly by the entity’s chief operating decision maker for purposes of performance assessment and resource allocation. An operating segment generally has a segment manager who is  accountable to the chief operating decision maker for the results of the segment. An entity’s corporate headquarters is not considered an operating segment, nor are an entity’s post-employment benefit plans.

Educational Material on Ind AS 108 Operating Segments

Ind AS 108 Operating Segments : Indian Accounting Standard (Ind AS) 108, Operating Segments, requires to follow the management approach to disclose information about operating segments. It requires an entity to disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. The Educational Material on Ind AS 108 contains summary of Ind AS 108 discussing the key requirements of the Standard in brief and Frequently Asked Questions (FAQs) on issues which are expected to be encountered while implementing this Standard. The text of Ind AS 108 and significant differences between Ind AS 108 and AS 17 have been included as Appendices to make this Educational Material comprehensive.

Educational Material on Ind AS 108 Operating Segments

Ind AS 108 Operating Segments : Operating segments are components of a company. In general, the purpose of segment disclosures is to provide information that enables users of the financial statements to evaluate the nature and financial effects of business activities and the economic environment. The identification of an entity’s operating segments is the key factor in determining the level of information included in the segment disclosures. Under the old rule, entity-wide disclosures are required based on business and geographical reporting. Segments are classified as either primary or secondary, and disclosure requirements for secondary reporting segments are less detailed than those for primary reporting segments.

Core principle 

An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

Scope 

1) This Accounting Standard shall apply to companies to which Indian Accounting Standards (Ind AS) notified under the Companies Act apply.

2) If an entity that is not required to apply this Indian Accounting Standard chooses to disclose information about segments that does not comply with this Indian Accounting Standard, it shall not describe the information as segment information.

3) If a financial report contains both the consolidated financial statements of a parent that is within the scope of this Indian Accounting Standard as well as the parent’s separate financial statements, segment.

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Educational Material on Ind AS 108 Operating Segments 

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Educational Material on Ind AS 108 Operating Segments

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