Classification of Operating Segments as Reportable Under Ind AS 108 – A Case Study

Para 5 of Ind AS 108, Operating Segments, requires that an entity shall report separately information about an operating segment that meets any of the quantitative thresholds prescribed under the standard involving revenue, results and assets. Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements.

In this case study, the management of a company has classified each sector as an operating segment and combined Pharmaceutical and FMCG segments into a single operating segment. The company’s management has sought advice on whether the classification of each sector as the operating segment is correct and whether the aggregation of pharmaceutical and FMCG by the management as reportable segments is correct as per Ind AS 108.

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