Page 133 - IC26 LIFE INSURANCE FINANCE

SEGMENT LIABILITIES are those operating liabilities that result from operating activities and

that either are directly attributable 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 and vice versa.)

(Segment liabilities do not include income tax liabilities and vice versa.)

Similarly, if depreciation segment expenses then related assets comes under segment assets.

Primary segment and Secondary segment

One among the two, Business Segment and Geographical Segment, is primary segment and

other becomes secondary segment. The reporting requirements for the primary and secondary

segments are different.

Basis for identifying primary and secondary segments

Risks and returns are the main criteria for identifying primary and secondary segments.

 If the risks and returns of an enterprise are affected predominantly by differences in the

products, business segments are recognized as primary segments and geographical

segments as secondary segments and vice versa.

 If the risks and returns of an enterprise are affected both by differences in the products

as well as differences in the locations in which it operates, then the enterprise should use

business segments as its primary segment and geographical segment as its secondary segment.

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