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A segment is a component that the enterprise, pursuant to a single plan, is that can be distinguished operationally and for financial reporting purposes. A segment consists of a major line of business or geographical area of operations that is to be disposed of in a single transaction or by demerger or spin-off of ownership. If a particular item of depreciation or amortisation is included in segment expense, the related asset is also included in segment assets.
A segment is a component that the enterprise, pursuant to a single plan, is that can be distinguished operationally and for financial reporting purposes. A segment consists of a major line of business or geographical area of operations that is to be disposed of in a single transaction or by demerger or spin-off of ownership. If a particular item of depreciation or amortisation is included in segment expense, the related asset is also included in segment assets.
A segment is a component that the enterprise, pursuant to a single plan, is that can be distinguished operationally and for financial reporting purposes. A segment consists of a major line of business or geographical area of operations that is to be disposed of in a single transaction or by demerger or spin-off of ownership. If a particular item of depreciation or amortisation is included in segment expense, the related asset is also included in segment assets.
Disposing of substantially in its entirety in a single transaction or by
demerger or spin-off of ownership
Terminating through abandonment That represents a separate major line of business or geographical area of operations; Disposing of piecemeal, selling assets & settling its liabilities individually A component that the enterprise, pursuant to a single plan, is That can be distinguished operationally and for financial reporting purposes. BODs has approved a detailed, formal plan & made an announcement of it Identification of the major assets to be disposed of Entered into a binding sale agreement for substantially all of the assets The period expected to be required for completion of the disposal The principal locations affected The location, function, & number of employees who will be compensated The expected method of disposal The estimated proceeds or salvage to be realised by disposal Expense due to operating activities that is directly attributable to the segment Expense that can be allocated on a reasonable basis to the segment Aggregate of Extraordinary items, Interest expense & income tax expense Excludes Losses on sales of investments or losses on extinguishment of debt General administrative expenses, head-office expenses, and other expenses that arise at the enterprise level and relate to the enterprise as a whole. If interest is included as a part of the cost of inventories such interest is considered as a segment expense. Internal financial reporting system as the starting point for identifying items that can be directly attributed to segments. The organisational & internal reporting structure of whether its dominant source of geographical risks will normally provide evidence The risks and returns are influenced both by the geographical location of its operations and also by the location of its customers Allocation to segments would not be based on Internal financial reporting system but pursuant to their respective definitions If a particular item of depreciation or amortisation is included in segment expense, the related asset is also included in segment assets. Segment liabilities do not include borrowings and other liabilities that are incurred for financing rather than operating purposes. Intra-enterprise transactions are eliminated while preparing enterprise financial statements, except to the extent that such intra-enterprise balances and transactions are within a single segment. Segment revenue, segment expense, segment assets and segment liabilities are determined before intra-enterprise balances Organisational components for which information is reported internally If the risks and returns of an enterprise are affected predominantly by differences in the products and services it produces, its primary format for reporting segment information should be business segments with secondary information reported geographically and vice-versa If they are based neither on individual products or services nor to the geographical areas in which it operates choose anyone as the primary segment with the other secondary segment If risks and returns of an enterprise are strongly affected by both, as evidenced by a matrix approach then the enterprise should use business segments as its primary segment & geographical segments as its secondary reporting format; and Business and geographical segments for external reporting purposes should be those organisational units for which information is reported to BODs and to CEO for the purpose of evaluating the units performance & for making decisions about future allocations of resources A segment that meets the definition should not be further segmented BODs should determine its business segments and geographical segments for external reporting purposes based on the factors in the definitions rather than on the basis of its system of internal financial reporting Those segments that do not satisfy the definitions should look to the next lower level of internal segmentation If such lower-level segment meets the definition, the criteria in paragraph 27 for identifying reportable segments should be applied to that segment A segment should be identified as a reportable segment if Its segment assets are 10% or more of the total assets Its revenue from sales to external customers and from transactions with other segments is 10% or more of the total revenue of all segments; Or Its segment result, whether profit or loss, is 10% or more of the combined result of all segments in profit or loss whichever is greater; Or A segment which is not a reportable segment, may be designated as a reportable segment at the discretion of the management of the enterprise. If that segment is not designated as a reportable segment, it should be included as an unallocated reconciling item. If total external revenue attributable to reportable segments constitutes less than 75% of the total enterprise revenue, additional segments should be identified as reportable segments, even if they do not meet the above A segment identified as a reportable segment in immediately preceding period should continue to be a reportable segment for the current period If a segment is a reportable segment in the current period restate to reflect the newly reportable segment as a separate segment in the preceding-period Do the segments reflected in Internal Financial Reporting System meet the definitions in Para 5 Use segments reported to BODs & CEOs Do some segments meet the definitions in Para 5 Yes No May be Reportable Segments Go to next level of internal segmentation Yes No Does the segments exceed the quantitative thresholds May be Reportable Segments Yes No