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Summary of IND AS 108


  1. Important for the stakeholders to understand and evaluate the performance of the business.
  2. Not a part of Schedule III but a part of SEBI disclosure.
IND AS 108 - Operating Segments


  1. Identify operating segments
  2. Aggregation of operating segments based on similar economic characteristics.
  3. Identify reportable segments.
  4. Preparation of segment reporting.

A. Identification of operating segments

Identification is based on 3 criterias. That is any operating segment should have 3 characteristics.

  1. Component of entity for which discrete financial information is available. (income, expense, assets, liability)
  2. Component of entity whose performance is evaluated and reviewed by the Chief Operating Decision Maker (CODM) for the purpose of allocation of resources and better decision making.
  3. Component of entity which generates revenue on its own and incurs expenditure too. It also includes a component which has already incurred expenses and is yet to generate revenue.


  1. CODM is not a position in itself. It is a function. It can be performed by the CEO, COO, executive director, etc.
  2. AS 17 required segmentation into business segment wise and geographical segment wise based on risk and return approach. However IND AS 108 follows management approach.

B. Aggregation of operating segments

Operating segments are aggregated based on similar economic characteristics. It includes:

  1. Based on customer type
  2. Based on production process
  3. Based on distribution type
  4. Based on the products/services offered
  5. Based on the regulatory environment to which it belongs (eg: Banking, Insurance)

C. Quantitative thresholds

Separate financial information should be available for and presented for the operating segments that meet the following criterias:

a. Revenue of that segment should be atleast 10% of the total revenue. (Revenue includes external as well as inter-segment revenue)

b. Profit or loss from that segment should be atleast 10% of the total entity.

Eg: Whether profit or loss-it should be considered as absolute numbers

Take a total of 10 operating segments























  • Combined profits=240
  • Combined losses=170
  • Higher of the above is 240
  • 10% of 240 is 24

Therefore segment with profit or loss greater than 24 is identified as a reportable segment.

c. Assets of that segment should be atleast 10% of the total assets.



  1. In case an operating segment does not meet the criteria of quantitative threshold and yet is found to be useful to the users of the financial statements, in such cases, the information shall be disclosed.
  2. In case a reportable segment in the previous year, enjoys a continuing significance from the previous year inspite of not qualifying a quantitative threshold in the current year, the same shall be identified as a reportable segment and disclosed.
  3. If the total external revenue reported by the operating segments does not constitute 75% of the external revenue then additional operating segments irrespective of them qualifying to be reportable segments based on quantitative thresholds shall be disclosed in order to report atleast 75% of the entity’s revenue.

Source: ICAI

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