Ind-AS 108 Operating Segments

By Prateek Walia

Ind-AS 108 Operating Segments guides on dealing with the disclosure requirements in respect of the segments of the entities and will replace AS-17 Segment Reporting.

As per Ind-AS 108, Operating Segment is a component of the entity :

  • that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity),
  • whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
  • for which discrete financial information is available.

Aggregation Criteria of Segment
Characteristic Basis such as Nature of Products & Services, Nature of Production Processes, Types of Customers, Distribution Channel and Regulatory sector such as Banking, Insurance, NBFC etc
Quantitative Basis: Revenue constitutes 10% or more OR Profit/Loss constitute 10 % or more of the Absolute Amount OR 10% or more of the Total Assets.
Overriding Criteria: In any case if the Quantitative criteria is out of reach, characteristic criteria will supersede.

Further, reportable segments should account for atleast 75% of entity’s Revenue. In case the same fall short of the threshold, additional operating segments shall be identified as reportable segments (even if they do not meet the criteria) until at least 75% of the entity’s revenue is included in reportable segments.

Happy Segment Reporting!

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