Page 36 - BANKING FINANCE JULY 2016
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ARTICLE
Comparison between AS 17 and Ind AS AS 17 has guided to calculate the segment revenue/ex-
108 penses without considering the interest revenue/expenses
if any, but Ind AS 108 asked to report the interest ex-
According to the management approach of Ind AS 108, penses and revenue for each reportable segments sepa-
operating segment is identified on the basis of the inter- rately.
nal report which are regularly reviewed by the CODM but
AS 17 used risk return approach with the entity's system Under Ind AS 108, disclosures are required when an entity
of internal financial reporting to key management per- receives more than 10% of its revenue from a single cus-
sonal to identify the primary or secondary segments. tomer. In this regards the entity must disclose the fact,
the total amount of revenues earned from each such cus-
Although the approaches to identification of the segments tomer and the name of the operating segments that re-
are different from each other but, adoption of Ind AS 108 ports the revenue. These disclosures were not required by
may or may not change the entity's segments. If under AS AS 17.
17 an entity identified its primary segments on the basis
of reports provided to the person whom Ind AS 108 re- AS 17 has released the single segment entity from the
gards as the chief operating decision maker (CODM), preparation of the segment report but, Ind AS 108 re-
those might become the operating segments for the pur- quires disclosure about that entity's products and services,
pose of Ind AS 108. geographical areas and major customers even if it has
only one reportable segment.
Ind AS 108 allows to use the same basis to measure infor-
mation as it used to prepare the internal report for Distinctions between Ind AS 108 and
CODM, even if this report is not prepared in accordance IFRS 8
with the Ind AS accounting policies. As a result, there will
be diversity in the amount reported in segment report In the convergence project ICAI issued Ind AS 108 'Oper-
with the corresponding amount reported in the entity's ating Segments' converged with IFRS 8 for replacing AS 17
primary financial statement. But AS 17 demanded the 'Segment Reporting' to reduce the diversity in interna-
basis of measurement it would be in conformity with the tional requirements. ICAI founds that the IFRS 8 provides
accounting policies adopted for preparing and presenting more useful information than that of AS 17. Therefore,
the financial statements. ICAI had issued Ind AS 108 for adopting the requirements
of IFRS 8 through removing the diversity between the IFRS
Unlike AS 17, Ind AS 108 does not define terms such as 8 and AS 17, excepting some terminologies and some mi-
"segments revenue", "segment profit or loss", "segment nor differences which are given below:
assets" and "segment liabilities". As a result, entities will Transitional provisions have not been given in the Ind
have more discretion in determining what will be included
in segment profit or loss under Ind AS 108. This also AS 108 but IFRS 8 specifically mention that particular
leads to diversify in reporting practices among the various provision, although all transitional provisions have
entities. been included in Ind AS 101 corresponding to IFRS 1.
According to Ind-AS 108, an entity must disclose an expla- Several different terminologies are used in existing
nation of how it has determined its reportable operating law like 'Balance Sheet'. Statement of profit or loss
segments and the basis on which the disclosed amounts instead of 'Statement of Financial Position' and 'State-
have been measured. But under AS 17 these information ment of Comprehensive Income' respectively.
have not required to be disclosed.
Prospective Impact of Ind AS 108 on
AS 17 does not allow are to aggregate two or more seg- Segment Reporting Practices in India
ments whereas Ind AS 108 allows to aggregate them sub-
ject to some specified aggregation criteria. It is likely that in many cases the identified segment
will be the same even after the implementation of Ind
AS 108 as risk-return is the main thing behind any eco-
36 | 2016 | JULY | BANKING FINANCE
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