NFRS 8 – OPERATING SEGMENTS
PRACTICAL QUESTIONS
Q1 Leela Ltd has 10 segments. The share of revenue, profit/loss and assets of each
of these ten segments is given below. The company has identified segments H I
and J for reporting. Comment on the adequacy of reporting, assuming there are
no inter segment revenues.
Segments
A,B,C,D,E,F,G
H,I
J
Revenues
5% each=35%
20% each=40%
25%
Profit(Loss)
5% each=35%
25% each=50%
15%
Assets
8% each=56%
20% each=40%
4%
Q2 Information relating to five segments of Ballav Ltd is as under: (Rs. in lakhs)
Segments
Segment
Revenue
Segment
Results
Segment
Assets
A
150
B
200
C
200
D
50
E
300
Total
900
50
(70)
80
10
(25)
45
40
65
140
20
35
200
Q3 Bhari Ltd has the following business/geographical segments. Examine which
of these are reportable Segments under NFRS-8. (Information in ‘000)
Segments
A
B
C
Revenues
9,600
300
100
Profit(Loss)
1,750
180
70
Assets
4,100
450
450
Q4 Following is the data regarding six segments of War Ltd. (Rs. in lakhs)
Segments
Segment
Revenue
Segment
Results
Segment
Assets
A
150
B
310
C
40
D
30
E
40
F
30
25
(95)
5
5
(5)
15
20
40
15
10
10
5
The finance director is of the view that it is sufficient that segments A and B alone
are reported. Advice
Q5 From the following information of Universe Ltd having two primary segments,
prepare statement classifying the same under appropriate heads: (Rs. In Lakhs)
Particulars
Segment Revenue (See note)
Segment Profit
Capital Expenditure
Non-Cash Expense excluding Depreciation
Liabilities
Assets
Depreciation
A
27,100
4,640
1,300
114
3,430
19,450
110
B
3,280
(197)
16
16
770
2,700
15
C
2,200
6,550
Dividend Income: 285
Interest Expense: 35
Tax Provision:
1675
Note: Segment revenue for Alpha includes inter segment revenue of 50.
Q6 Surya Ltd group has three divisions A, B and C. Details of their turnover, results
and net assets are given below (‘000) prepare a segmental report.
Division A
(a) Sales to division b Rs. 3050
(b) Local sales Rs. 60
(c) Export Sales Rs. 4090
Division B
(a) Sales to division C Rs. 30
(b) Export Sales to Europe Rs. 200
Division C
(a) Export sales to USA Rs. 180
Other Information:
Particulars
Profit or Loss before Tax
Re allocated cost from Head Office
Interest Costs
Fixed Assets
Net Current Assets
Long Term Liabilities
Head
Office
50
48
38
A
B
C
160
48
4
200
120
20
20
24
5
40
40
10
(8)
24
1
120
90
120
Q7 Prepare a segmental report for publication in Public Ltd from the following
details of the company’s segment three divisions and head office:
Particulars
A
Sales to B
Other Domestic Sales
Export Sales
Rs ‘000
4,575
90
6,135
10,800
B
Sales to C
Export Sales
45
300
345
C
Export Sales
270
Particulars
Pre Tax operating results
Head Office cost reallocated
Interest Costs
Fixed Assets
Net Current Assets
Long Term Liabilities
Head
Office
75
72
57
A ‘000
B ‘000
C ‘000
240
72
6
300
180
30
30
36
8
60
60
15
(12)
36
2
180
135
180
Q8 Following details are given for Peach Ltd for the year ended 31.03.2013
Particulars
Sales:
Food Products
Plastic and Packaging
Health and Scientific
Others
Expense:
Food Products
Plastic and Packaging
Health and Scientific
Others
General Corporate Expense
Income from Investments
‘000
‘000
5650
625
345
162
6782
3335
425
222
200
4182
562
132
Interest Expense
Identifiable Assets:
Food Products
Plastic and Packaging
Health and Scientific
Others
General Corporate Assets
65
7320
1320
1050
665
10355
722
Other Information:
(a) Inter segment sales are as below:
Food Products
: 55,000
Plastic and Packaging
: 72,000
Health and Scientific
: 21,000
Others
: 7,000
(b) Operating profit included Rs. 33,000 on inter segment sales.
(c) Information about inter segment expenses are not available.
You are required to prepare a statement showing financial information about
Peach Ltd operations in different industry segments.
Q9 Lever is a multinational company having head office in Kathmandu. The
following details are available from the books and other records of the company
for the year ended 31st March, 2014:
Particulars
Sales:
Domestic
Europe
America
Australia
Inter unit sales not included above
Domestic
Europe
Operating Profit
Domestic
Europe
America
Australia
Other Items
General Corporate Expense
Interest Expense
Income from Investment
‘000
‘000
7,625
1,676
2,325
766
12392
523
760
1283
3,575
762
1,262
344
5,943
362
274
166
Identifiable Assets:
Domestic
Europe
America
Australia
General Corporate Assets
Investments
10,620
5,635
3,205
1,560
21,020
750
675
Prepare a statement showing financial information about the operations of Lever
Ltd in different geographical segments.
Q10 A multinational enterprise by the name of Juju has business activities located
in three segments. The relevant details are as follows:
Location
Europe
North America
Asia
Relevant Percentage for allocation of:
Revenue and Costs (%)
Assets and Liabilities (%) (Note
2)
60
40
20
40
20
20
The allocation percentage to be applied to revenue and cost for net of
intergroup revenue: (See note 3).
1. Details relating to head office
The head office procures all necessary finance for the enterprise’s activities
and allocates this finance to operating units through current accounts.
Some costs, assets and liabilities relate solely to head office and cannot be
allocated to segments on a rational basis. These amounts are as follows:
- Operating costs of Rs. 80 lakhs at 31 st March, 2015.
- Non-current financial assets.
- Bank balance of Head Office is Rs. 140 lakhs at 31st March, 2015.
- All liabilities except trade payables.
2. Intergroup revenues – year to 31st March 2015
Selling
Segment
Europe
North America
Asia
Intergroup Sales
‘000
Intergroup sales made to ‘000
Europe
16,000
12,800
10,400
8,800
5,600
14,400
North
America
11,200
4,800
16,000
Asia
4,800
4,000
8,800
Extracts from the consolidated financial statement of Juju Ltd for the year ended
31st March, 2015:
Statement of Comprehensive Income- Year ended 31st March, 2015
Particulars
‘000
532,000
(249,600)
282,400
(79,200)
(94,400)
108,800
4,800
(20,000)
93,600
(22,400)
71,200
(6,400)
64,800
Revenue
Cost of Sales
Gross Profit
Distribution Costs
Administrative Expenses
Profit from Operations
Income from Investments
Finance Costs
Profit before Tax
Income Tax Expense
Profit after Tax
Non-Controlling Interest
Net Profit for the Period
Statement of Financial Position as at 31st March, 2015
Particulars
Assets
Non-Current Assets
Property, Plant and Equipment
Financial Assets
Current Assets
Inventories
Trade Receivables
Bank Balances
Equity and Liabilities
Capital and Reserves
Issued Capital
Accumulated Profits
Non-Current Liabilities
Interest bearing borrowings
Deferred Tax
Current Liabilities
Trade and Other Payables
Short Term Borrowings
‘000
‘000
272,000
40,000
312,000
60,000
83,200
19,200
162,400
474,400
120,000
144,000
264,000
112,000
28,800
140,800
56,000
13,600
69,600
474,400
Prepare a segment report for Juju for the year ended 31st March, 2015 that
complies with NFRS-8.