Page 10 - 25. COMPILER QB - IND AS 108

Heavy Goods Ltd. needs to determine how many reportable segments it has. You are required to advise Heavy
Goods Ltd. as per the criteria defined in Ind AS 108.

SOLUTION
As per Ind AS 108, an entity shall report separately information about an operating segment that meets any
of the following quantitative thresholds:

a) Its reported revenue, including both sales to external customers and inter-segment sales or transfers, is 10
per cent or more of the combined revenue, internal and external, of all operating segments.
Combined total sales of all the segments = Rs. 10,400 + Rs. 35,350 = Rs. 45,750. 10% thresholds =
45,750 x 10% = 4,575.
b) The absolute amount of its reported profit or loss is 10 per cent or more of the greater, in absolute

amount, of
i) the combined reported profit of all operating segments that did not report a loss and
ii) the combined reported loss of all operating segments that reported a loss.
In the given situation, combined reported profit = Rs. 6,000 and combined reported loss (Rs. 2,250).
Hence, for 10% thresholds Rs. 6,000 will be considered.
10% thresholds = Rs. 6,000 x 10% = Rs. 600

c) Its assets are 10 per cent or more of the combined assets of all operating segments. Combined total
assets of all the segment = Rs. 1,02,750
10% thresholds = Rs. 1,02,750 x 10% = 10,275
Accordingly, quantitative thresholds are calculated below:

Segments L M N O P Q Reportable
segments
% segment sales to total sales 36.66% 24.59% 9.84% 11.48% 13.11% 4.92% L, M,O,P
% segment profit to total profits 50% 25% 25% 12.5% 15% 10% L,M,N,O,P,Q
% segment Assets to total assets 36.50% 22.63% 15.33% 10.22% 10.22% 5.11% L,M,N,O,P

Segments L, M, O and P clearly satisfy the revenue and assets tests and they are separate reportable

segments.
Segment N does not satisfy the revenue test, but it does satisfy the asset test and it is a reportable
segment.
Segment Q does not satisfy the revenue or the assets test but it does satisfy the profits test. Therefore,
Segment Q is also a reportable segment.
Hence, all segments i.e; L, M, N, O, P and Q are reportable segments.

Q8 (July 21 – 6 Marks) – (Similar to Q5)
U Limited is operating in the paint industry. Its business segments comprise paints (wall paints, lead paints,

zinc paints, aluminium paints etc.), and others (consisting of primer, varnish, thinner and related products).
Certain information for financial year 2020-2021 is given below: (Rs. in lakh)
Segments External Revenue GST Other operating Result Assets Liabilities
(Inc. GST) income

Paints 10,000 250 2000 500 2500 1500
Other 3,500 150 750 200 1500 500

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