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1. 1
PROJECT REPORT ON
“Accounting Standard 17- Its Application in Corporate Sector”
Submitted to
University of Mumbai
In Partial Fulfillment of the Requirement
For
M.Com (Accountancy) Semester II
In the subject
Financial Accounts
By
Name of the student : - Vivek ShriramMahajan
Roll No. : - 14 -7288
Name and address of the college
K. V. Pendharkar College
Of Arts, Science & Commerce
Dombivli (E), 421203
APRIL 2015

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DECLARATION
I VIVEK SHRIRAM MAHAJAN Roll No. 14 – 7288, the student of
M.Com (Accountancy) Semester II (2015), K. V. Pendharkar College,
Dombivli, Affiliated to University of Mumbai, hereby declare that the project
for the subject Financial Accounts titled “Accounting Standard 17- Its
Application in Corporate Sector” submitted by me to University of Mumbai,
for semester II examination is based on actual work carried by me.
I further state that this work is original and not submitted anywhere else for any
examination.
Place : Dombivli
Date:
Signature of the Student
Name: - Vivek Shriram Mahajan
Roll No: - 14 -7288

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ACKNOWLEDGEMENT
It is a pleasure to thank all those who made this project work
possible.
I Thank the Almighty God for his blessings in completing this task.
The successful completion of this project is possible only due to
support and cooperation of my teachers, relatives, friends and well-
wishers. I would like to extend my sincere gratitude to all of them.
I am highly indebted to Principal A.K.Ranade, Co-ordinater
P.V.Limaye, and my subject teacher Tejashree Gawde for their
encouragement, guidance and support.
I also take this opportunity to express sense of gratitude to my
parents for their support and co-operation in completing this project.
Finally I would express my gratitude to all those who directly and
indirectly helped me in completing this project.
Name of the student
Vivek Shriram Mahajan

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TABLE OF CONTENTS
CHAPTER No Topic Page no
CHAPTER 1 Introduction
Introduction to Subject …………………………
Definition of Accounting Standard…………
5
5
CHAPTER 2 Types of Accounting Standard
List of Indian Accounting Standards........……… 6
CHAPTER 3 Introduction to SegmentReporting
Definitions....................................................
Objective.......................................................
Scope.............................................................
8
13
13
CHAPTER 4 Advantages & DisadvantagesofSegment
Reporting
Advantages …………………...................
Disadvantages……………………............
Chief Operating Decision Maker.................
20
20
21
CHAPTER 5 Application in Corporate Sector
Application in Tata Group................................ 22
Conclusion 28

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CHAPTER 1: Introduction
Introduction to Subject
Indian Accounting Standards (abbreviated as India AS) are a set of accounting standards
notified by the Ministry of Corporate Affairs which are converged with International
Financial Reporting Standards (IFRS). These accounting standards are formulated by
Accounting Standards Board of Institute of Chartered Accountants of India. Now India will
have two sets of accounting standards viz. existing accounting standards under Companies
(Accounting Standard) Rules, 2006 and IFRS converged Indian Accounting Standards (Ind
AS). The Ind AS are named and numbered in the same way as the corresponding IFRS.
NACAS recommend these standards to the Ministry of Corporate Affairs. The Ministry of
Corporate Affairs has to spell out the accounting standards applicable for companies in
India. As on date the Ministry of Corporate Affairs notified 35 Indian Accounting
Standards(Ind AS).This shall be applied to the companies of financial year 2015-16
voluntarily and from 2016-17 on a mandatory basis. Based on the international consensus,
the regulators will separately notify the date of implementation of AS Ind for the banks,
insurance companies etc. Standards for the computation of Tax would be notified separately.
A principle that guides and standardizes accounting practices. The Generally Accepted
Accounting Principles (GAAP) are a group of accounting standards that are widely accepted
as appropriate to the field of accounting. Accounting standards are necessary so that
financial statements are meaningful across a wide variety of businesses; otherwise, the
accounting rules of different companies would make comparative analysis almost
impossible.
INVESTOPEDIA EXPLAINS 'ACCOUNTING STANDARD
An accounting standard is a guideline for financial accounting, such as how a firm prepares
and presents its business income and expense, assets and liabilities. The Generally Accepted
Accounting Principles is comprised of a large group of individual accounting standards.
GAAP standards apply to financial reporting in the United States and may be eventually
phased out in favor of the International Accounting Standards.

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CHAPTER 2: Types of Accounting Standard
List of Indian Accounting Standards
The following are the mandatory of Accounting Standards (AS) as on July 1, 2012 as listed
on the site of The Institute of Chartered Accountants of India (ICAI)
AS 1 Disclosure of Accounting Policies
AS 2 Valuation of Inventories
AS 3 Cash Flow Statement
AS 4 Contingencies and Events Occurring after the Balance Sheet Date
AS 5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting
Policies
AS 6 Depreciation Accounting
AS 7 Construction Contract
AS 8 Accounting for Research and Development (AS-8 is no longer in force since it was
merged with AS-26)
AS 9 Revenue Recognition
AS 10 Accounting for Fixed Assets
AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003)
AS 12 Accounting for Government Grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits (revised 2005)
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18 Related Party Disclosures
AS 19 Leases

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AS 20 Earnings per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions, Contingent Liabilities and Contingent Assets
AS 30 Financial Instruments: Recognition and Measurement and Limited

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CHAPTER 3: Introduction to SegmentReporting
This Accounting Standard is not mandatory for Small and Medium Sized Companies, as
defined in the Notification. Such companies are however encouraged to comply with the
Standard.
Definitions
The following terms are used in this Standard with the meanings specified:
A business segment is a distinguishable component of an enterprise that is engaged in
providing an individual product or service or a group of related products or services and that
is subject to risks and returns that are different from those of other business segments.
Factors that should be considered in determining whether products or services
are related include:
(a) the nature of the products or services;
(b) the nature of the production processes;
(c) the type or class of customers for the products or services;
(d) the methods used to distribute the products or provide the services; and
(e) if applicable, the nature of the regulatory environment, for example, banking, insurance,
or public utilities.
A geographical segment is a distinguishable component of an enterprise that is engaged in
providing products or services within a particular economic environment and that is subject
to risks and returns that are different from those of components operating in other economic
environments. Factors that should be considered in identifying geographical segments
include:
(a) similarity of economic and political conditions;
(b) relationships between operations in different geographical areas;
(c) proximity of operations;
(d) special risks associated with operations in a particular area;
(e) exchange control regulations; and
(f) the underlying currency risks.

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A reportable segment is a business segment or a geographical segment identified on the
basis of foregoing definitions for which segment information is required to be disclosed by
this Standard.
Enterprise revenue is revenue from sales to external customers as reported in the statement
of profit and loss.
Segment revenue is the aggregate of
(i) the portion of enterprise revenue that is directly attributable to a segment,
(ii) the relevant portion of enterprise revenue that can be allocated on a reasonable basis to a
segment, and
(iii) revenue from transactions with other segments of the enterprise.
Segment revenue does not include:
(a) extraordinary items as defined in AS 5, Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies;
(b) interest or dividend income, including interest earned on advances or loans to other
segments unless the operations of the segment are primarily of a financial nature; and
(c) gains on sales of investments or on extinguishment of debt unless the operations of the
segment are primarily of a financial nature.
Segment expense is the aggregate of
(i) the expense resulting from the operating activities of a segment that is directly
attributable to the segment, and
(ii) the relevant portion of enterprise expense that can be allocated on a reasonable basis to
the segment, including expense relating to transactions with other segments of the
enterprise.
Segment expense does not include:
(a) Extraordinary items as defined in AS 5, Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies;
(b) interest expense, including interest incurred on advances or loans from other segments,
unless the operations of the segment are primarily of a financial nature;

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Explanation:
The interest expense relating to overdrafts and other operating liabilities identified to a
particular segment are not included as a part of the segment expense unless the operations of
the segment are primarily of a financial nature or unless the interest is included as a part of
the cost of inventories. In case interest is included as a part of the cost of inventories where
it is so required as per AS 16, Borrowing Costs, read with AS 2, Valuation of Inventories,
and those inventories are part of segment assets of a particular segment, such interest is
considered as a segment expense. In this case, the amount of such interest and the fact that
the segment result has been arrived at after considering such interest is disclosed by way of a
note to the segment result.
(c) losses on sales of investments or losses on extinguishment of debt unless the operations
of the segment are primarily of a financial nature;
(d) income tax expense; and
(e) general administrative expenses, head-office expenses, and other expenses that arise at
the enterprise level and relate to the enterprise as a whole. However, costs are sometimes
incurred at the enterprise level on behalf of a segment. Such costs are part of segment
expense if they relate to the operating activities of the segment and if they can be directly
attributed or allocated to the segment on a reasonable basis.
Segment result is segment revenue less segment expense.
Segment assets are those operating assets that are employed by a segment in its operating
activities and that either are directly attributable to the segment or can be allocated to the
segment on a reasonable basis.
If the segment result of a segment includes interest or dividend income, its segment assets
include the related receivables, loans, investments, or other interest or dividend
generating assets.
Segment assets do not include income tax assets.
Segment assets are determined after deducting related allowances/ provisions that are
reported as direct offsets in the balance sheet of the enterprise.
Segment liabilities are those operating liabilities that result from the operating activities of a
segment and that either are directly attributable to the segment or can be allocated to the
segment on a reasonable basis.
If the segment result of a segment includes interest expense, its segment liabilities include
the related interest-bearing liabilities.

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Segment liabilities do not include income tax liabilities.
Segment accounting policies are the accounting policies adopted for preparing and
presenting the financial statements of the enterprise as well as those accounting policies that
relate specifically to AS 17.
The organisational and internal reporting structure of an enterprise will normally provide
evidence of whether its dominant source of geographical risks results from the location of its
assets (the origin of its sales) or the location of its customers (the destination of its sales).
Accordingly, an enterprise looks to this structure to determine whether its geographical
segments should be based on the location of its assets or on the location of its customers.
Determining the composition of a business or geographical segment involves a certain
amount of judgement. In making that judgement, enterprise management takes into account
the objective of reporting financial information by segment as set forth in this Standard and
the qualitative characteristics of financial statements as identified in the Framework for the
Preparation and Presentation of Financial Statements issued by the Institute of Chartered
Accountants of India. The qualitative characteristics include the relevance, reliability, and
comparability over time of financial information that is reported about the different groups
of products and services of an enterprise and about its operations in particular geographical
areas, and the usefulness of that information for assessing the risks and returns of the
enterprise as a whole.
The predominant sources of risks affect how most enterprises are organised and managed.
Therefore, the organisational structure of an enterprise and its internal financial reporting
system are normally the basis for identifying its segments.
The definitions of segment revenue, segment expense, segment assets and segment liabilities
include amounts of such items that are directly attributable to a segment and amounts of
such items that can be allocated to a segment on a reasonable basis. An enterprise looks to
its internal financial reporting system as the starting point for identifying those items that
can be directly attributed, or reasonably allocated, to segments. There is thus a presumption
that amounts that have been identified with segments for internal financial reporting
purposes are directly attributable or reasonably allocable to segments for the purpose of
measuring the segment revenue, segment.

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In some cases, however, a revenue, expense, asset or liability may have been allocated to
segments for internal financial reporting purposes on a basis that is understood by enterprise
management but that could be deemed arbitrary in the perception of external users of
financial statements. Such an allocation would not constitute a reasonable basis under the
definitions of segment revenue, segment expense, segment assets, and segment liabilities in
this Standard. Conversely, an enterprise may choose not to allocate some item of revenue,
expense, asset or liability for internal financial reporting purposes, even though a reasonable
basis for doing so exists. Such an item is allocated pursuant to the definitions of segment
revenue, segment expense, segment assets, and segment liabilities in this Standard.
Examples of segment assets include current assets that are used in the operating activities of
the segment and tangible and intangible fixed assets. If a particular item of depreciation or
amortisation is included in segment expense, the related asset is also included in segment
assets. Segment assets do not include assets used for general enterprise or head-office
purposes. Segment assets include operating assets shared by two or more segments if a
reasonable basis for allocation exists. Segment assets include goodwill that is directly
attributable to a segment or that can be allocated to a segment on a reasonable basis, and
segment expense includes related amortisation of goodwill. If segment assets have been
revalued subsequent to acquisition, then the measurement of segment assets reflects those
revaluations.
16. Examples of segment liabilities include trade and other payables, accrued liabilities,
customer advances, product warranty provisions, and other claims relating to the provision
of goods and services. Segment liabilities do not include borrowings and other liabilities that
are incurred for financing rather than operating purposes. The liabilities of segments whose
operations are not primarily of a financial nature do not include borrowings and similar
liabilities because segment result represents an operating, rather than a net-of-financing,
profit or loss. Further, because debt is often issued at the head-office level on an enterprise-
wide basis, it is often not possible to directly attribute, or reasonably allocate, the interest
bearing liabilities to segments.
Segment revenue, segment expense, segment assets and segment liabilities are determined
before intra-enterprise balances and intra-enterprise transactions are eliminated as part of the
process of preparation of enterprise financial statements, except to the extent that such intra-
enterprise balances and transactions are within a single segment.
While the accounting policies used in preparing and presenting the financial statements of
the enterprise as a whole are also the fundamental segment accounting policies, segment
accounting policies include, in addition, policies that relate specifically to segment
reporting, such as identification of segments, method of pricing inter-segment transfers, and
basis for allocating revenues and expenses to segments.

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Objective
The objective of this Standard is to establish principles for reporting financial information,
about the different types of products and services an enterprise produces and the different
geographical areas in which it operates. Such information helps users of financial
statements:
(a) better understand the performance of the enterprise;
(b) better assess the risks and returns of the enterprise; and
(c) make more informed judgements about the enterprise as a whole.
Many enterprises provide groups of products and services or operate in geographical areas
that are subject to differing rates of profitability, opportunities for growth, future prospects,
and risks. Information about different types of products and services of an enterprise and its
operations in different geographical areas - often called segment information - is relevant to
assessing the risks and returns of a diversified or multi-locational enterprise but may not be
determinable from the aggregated data. Therefore, reporting of segment information is
widely regarded as necessary for meeting the needs of users of financial statements.
Scope
1. This Standard should be applied in presenting general purpose financial statements.
2. The requirements of this Standard are also applicable in case of consolidated financial
statements.
3. An enterprise should comply with the requirements of this Standard fully and not
selectively.
4. If a single financial report contains both consolidated financial statements and the
separate financial statements of the parent, segment information need be presented only on
the basis of the consolidated financial statements. In the context of reporting of segment
information in consolidated financial statements, the references in this Standard to any
financial statement items should construed to be the relevant item as appearing in the
consolidated financial statements.

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Identifying Reportable Segments
Primary and Secondary Segment Reporting Formats
The dominant source and nature of risks and returns of an enterprise should govern whether
its primary segment reporting format will be business segments or geographical segments. If
the risks and returns of an enterprise are affected predominantly by differences in the
products and services it produces, its primary format for reporting segment information
should be business segments, with secondary information reported geographically.
Similarly, if the risks and returns of the enterprise are by the fact that it operates in different
countries or other geographical areas, its primary format for reporting segment information
should be geographical segments, with secondary information reported for groups of related
products and services.
Internal organization and management structure of an enterprise and its system of internal
financial reporting to the board of directors and the chief executive officer should normally
be the basis for identifying the predominant source and nature of risks and differing rates of
return facing the enterprise and, therefore, for determining which reporting format is
primary and which is secondary, except as provided in sub-paragraphs (a) and (b) below:
(a) if risks and returns of an enterprise are strongly affected both by differences in the
products and services it produces and by differences in the geographical areas in which it
operates, as evidenced by a ‘matrix approach’ to managing the company and to reporting
internally to the board of directors and the chief executive officer, then the enterprise should
use business segments as its primary segment reporting format and geographical segments
as its secondary reporting format; and
(b) if internal organizational and management structure of an enterprise and its system of
internal financial reporting to the board of directors and the chief executive officer are based
neither on individual products or services or groups of related products/ services nor on
geographical areas, the directors and management of the enterprise should determine
whether the risks and returns of the enterprise are related more to the products and services
it produces or to the geographical areas in which it operates and should, accordingly, choose
business segments or geographical segments as the primary segment reporting format of the
enterprise, with the other as its secondary reporting format.

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For most enterprises, the predominant source of risks and returns determines how the
enterprise is organised and managed. Organisational and management structure of an
enterprise and its internal financial reporting system normally provide the best evidence of
the predominant source of risks and returns of the enterprise for the purpose of its segment
reporting. Therefore, except in rare circumstances, an enterprise will report segment
information in its financial statements on the same basis as it reports internally to top
management. Its predominant source of risks and returns becomes its primary segment
reporting format. Its secondary source of risks and returns becomes its secondary segment
reporting format.
A ‘matrix presentation’ — both business segments and geographical segments as primary
segment reporting formats with full segment disclosures on each basis -- will often provide
useful information if risks and returns of an enterprise are strongly affected both by
differences in the products and services it produces and by differences in the geographical
areas in which it operates. This Standard does not require, but does not prohibit, a ‘matrix
presentation’.
In some cases, organization and internal reporting of an enterprise may have developed
along lines unrelated to both the types of products and services it produces, and the
geographical areas in which it operates. In such cases, the internally reported segment data
will not meet the objective of this Standard. Accordingly, paragraph 20(b) requires the
directors and management of the enterprise to determine whether the risks and returns of
the enterprise are more product/service driven or geographically driven and to accordingly
choose business segments or geographical segments as the primary basis of segment
reporting. The objective is to achieve a reasonable degree of comparability with other
enterprises, enhance understandability of the resulting information, and meet the needs of
investors, creditors, and others for information about product/service-related and
geographically related risks and returns.

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Segment Accounting Policies
Segment information should be prepared in conformity with the accounting policies adopted
for preparing and presenting the financial statements of the enterprise as a whole.
There is a presumption that the accounting policies that the directors and management of an
enterprise have chosen to use in preparing the financial statements of the enterprise as a
whole are those that the directors and management believe are the most appropriate for
external reporting purposes. Since the purpose of segment information is to help users of
financial statements better understand and make more informed judgments about the
enterprise as a whole, this Statement requires the use, in preparing segment information, of
the accounting policies adopted for preparing and presenting the financial statements of the
enterprise as a whole. That does not mean, however, that the enterprise accounting policies
are to be applied to reportable segments as if the segments were separate stand-alone
reporting entities. A detailed calculation done in applying a particular accounting policy at
the enterprise-wide level may be allocated to segments if there is a reasonable basis for
doing so. Pension calculations, for example, often are done for an enterprise as a whole, but
the enterprise-wide figures may be allocated to segments based on salary and demographic
data for the segments.
This Statement does not prohibit the disclosure of additional segment information that is
prepared on a basis other than the accounting policies adopted for the enterprise financial
statements provided that
(a) the information is reported internally to the board of directors and the chief executive
officer for purposes of making decisions about allocating resources to the segment and
assessing its performance and
(b) the basis of measurement for this additional information is clearly described.
Assets and liabilities that relate jointly to two or more segments should be allocated to
segments if, and only if, their related revenues and expenses also are allocated to those
segments.
The way in which asset, liability, revenue, and expense items are allocated to segments
depends on such factors as the nature of those items, the activities conducted by the
segment, and the relative autonomy of that segment. It is not possible or appropriate to
specify a single basis of allocation that should be adopted by all enterprises; nor is it
appropriate to force allocation of enterprise asset, liability, revenue, and expense items that
relate jointly to two or more segments, if the only basis for making those allocations is
arbitrary. At the same time, the definitions of segment revenue, segment expense, segment
assets, and segment liabilities are interrelated, and the resulting allocations should be
consistent. Therefore, jointly used assets and liabilities are allocated to segments if, and only
if, their related revenues and expenses also are allocated to those segments. For example, an
asset is included in segment assets if, and only if, the related depreciation or amortization is
included in segment expense.

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Disclosure in Segment Reporting
Transparency is the cornerstone of corporate financial reporting. Analysts and other
stakeholders need complete information to evaluate the sustainability and growth of a
company and to monitor the performance of its management. Complete disclosure of
information results in appropriate valuation of companies and thus improves the efficiency
of the capital market.
Theoretically, the risk for investment in equity of a company that discloses complete
information is lower than that of investment in equity of a company that withholds
information. Greater disclosure should therefore bring down the cost of capital for a firm.
No one, including managers, dispute this. Yet, in practice, managers often seek to limit
transparency as much as they can without violating the letter of the law.
A case in point is the reporting of segment information. For long, accounting standards have
sought to ensure that corporations that serve customers or have assets located in more than
one country or carry out more than one business should report the financial performance of
each separately.
Since the performance of each business is likely to be affected by quite distinct factors, such
disaggregated information would allow users of financial statements to more reliably predict
the future prospects of the firm. The US GAAP mandated disclosure of segment information
for the first time in 1976. Subsequently the rules have been modified in 1997.
The new rules require greater disclosure of disaggregated information. In India, the
requirement for the disclosure of segment information came in force from accounting
periods commencing on or after April 1, 2001, in respect of publicly traded companies and
also in respect of all other commercial, industrial and business reporting entities whose
turnover for the accounting period exceeds Rs 50 crore.
Accounting standards require companies to disclose segment revenue, segment expenses,
segment results, segment assets and segment liabilities. In absence of a reasonable basis,
common expenses and common assets and liabilities are not allocated to different segments.
Accounting standards require companies to disclose information based on the internal
management information system (MIS) that the CEO and the board of directors use to
manage and oversee the strategy and operations of different segments. They do not require
companies to redefine segments for external reporting. The objective is to allow investors to
see the company through the eyes of the management. This also helps to predict
management actions that can significantly affect future cash flows.

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Disclosure of segment information provides an insight into how business segments are
creating or destroying value. It also helps to understand the strategy and risk exposure of the
company. Companies are not required to provide information on all segments. A segment is
a reportable segment if: its revenue from sales, including revenue from internal transfers, is
10 per cent or more of total revenue, external and internal, of all segments; its segment
result, whether profit or loss, is 10 per cent or more of: the combined result of all segments
in profit, or the combined result of all segments in loss, whichever is greater in absolute
amount; or its segment assets are 10 per cent or more of the total assets of all segments. If
total external revenue attributable to reportable segments constitutes less than 75 per cent of
the total enterprise revenue, additional segments are identified as reportable segments, even
if they do not meet the 10 per cent threshold tests, until at least 75 per cent of the total
enterprise revenue is included in reportable segments.
More often than not the efforts by regulatory bodies to ensure greater transparency through
segment reporting have been thwarted by the actions of managers who have sought to evade
accountability from stakeholders by limiting the amount of information provided in financial
statements.
In their defense, managers argue that disclosure of proprietary information adversely affects
the entity's competitive advantage and thus adversely affects the interest of shareholders. If
this is true then companies that operate in a single business segment cannot create
sustainable competitive advantage. We can pick up large number of successful companies
that are operating in a single segment. Maruti, Tata Steel, ACC, DLF, Tata Tea, Bhatia
Televenture and Hero Honda are some of the companies which have maintained leadership
position in their respective industries for a long period.
We may examine the issue from another angle. Does a company that discloses segment
information actually lose in the competition? Many will agree that in India, Infosys
Technologies Limited discloses disaggregated information about different business and
geographical segments in which it operates in accordance with the spirit of the accounting
rules for segment reporting. But it has been able to maintain a leadership position for quite a
long period. Therefore, the argument put forward by managers is not tenable. Research in
the US reveals that adoption of new rules stipulated in SFAS-131 has not hurt the
competitive position of companies. However, it has improved external monitoring. Thus,
disclosure of disaggregated information on different segments in which the company
operates threatens the manager's job if the resource allocation between different segments is
suboptimal or if the company pursues poor diversification strategy.

19. 19
In fact, managers have strong incentives to aggregate segment information to avoid external
scrutiny by the market for corporate control. They want to avoid accountability. However, in
some situations it is just the mindset of managers. Take the example of Tata Motors. Tata
Motors, which manufactures both commercial vehicles and passenger cars, does not treat the
passenger car business separately from the commercial vehicles business for the purpose of
segment reporting. Rather, it lumps them together into a single automobile business. The
Centre for Monitoring Indian Industries' (CMIE) company database PROWSS considers
passenger car manufacturing and commercial vehicles manufacturing as two separate sub-
groups of the automobile industry. These two industries do not exhibit similar long-term
financial performance. It is also difficult to assume that the board of directors and CEO
carry on their function of overseeing the strategy and the operation of the company
effectively by looking only at aggregated information for passenger cars and commercial
vehicles.
Even if, for argument sake, we agree that it is debatable whether the two industries are
different in terms of risk and return, perhaps Tata Motors would have done better to disclose
the disaggregated information for the sake of investors and stakeholders who are interested
to have the disaggregated information. The question of information overload does not arise
because the company operates only in two business segments: manufacturing of passenger
car and manufacturing of commercial vehicles. US GAAP indicates that the question of
information overload begins when the number of segments goes beyond ten. It is hard to
believe that managers of Tata Motors, which belongs to the highly respected Tata Group, are
reluctant to submit their decisions to the scrutiny by the capital market.
In view of the managers' inherent reluctance to disclose information that strengthens
external monitoring, the board of directors, particularly the audit committee of the board,
should assume the responsibility of deciding what is to be disclosed and how much is to be
disclosed. The board should strengthen the external monitoring by inducing managers to
disclose all relevant information voluntarily and to implement accounting rules in spirit.
This, in turn, will strengthen monitoring by the board of directors. The auditor has to play an
important role in ensuring this. For example, the auditor is privy to the board records and the
internal MIS and therefore she is in the best position to assess the adequacy or otherwise of
the disclosure of segment information in external financial report. It would be really
unfortunate if she instead uses her expertise to justify the inadequate disclosure by the
company.

20. 20
CHAPTER 4: Advantages & Disadvantages of SegmentReporting
Advantages
 Highlights performance of the various parts of an organization.
 Enables users of financial statements to be better able to predict the future
profitability of an organisation, particularly where segments are involved in diverse
activities.
Disadvantages
Will lead to some costs being imposed on an organization
 Management less likely to take business risks in particular segments if
each segment’s results available.
 Competitors will have access to information concerning segment
profitability.
 may also provide encouragement for further entrants into the industry.
 Risk of takeover bids if losses made in particular segments and other
parties consider that they can manage the particular segment more
effectively.

21. 21
Chief Operating DecisionMaker
As we now know, an operating segment is a component of an entity about which separate
financial information is available and which is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. The
term ‘chief operating decision maker’ identifies a function, not necessarily a manager with a
specific title. That function is to allocate resources to and assess the performance of the
operating segments of an entity. Often the chief operating decision maker of an entity is its
chief executive officer or chief operating officer but, for example, it may be a group of
executive directors or others. The focus of the chief operating decision maker (whether an
individual or a group of individuals) therefore dictates which components of an entity are
deemed to be operating segments for the purposes of AASB 8.
Inter-Firm Comparability
 Allowing management to determine what components of their operation will
constitute ‘operating segments’ leads to concerns about comparing the results of
operating segments of different organisations operating across similar industries.
 However, the standard setters decided that the increased relevance of the information
outweighs this concern pertaining to comparability.
Quantitative Thresholds for Disclosing Operating Segments
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;
(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;
(c) Its assets are 10 per cent or more of the combined assets of all operating segments.
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.

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CHAPTER 5: Application in Corporate Sector
Tata Group
Tata Group is an Indian Multinational Conglomerate Company headquartered in Mumbai,
Maharashtra, India. It encompasses seven business sectors: communications and information
technology, engineering, materials, services, energy, consumer products and chemicals. Tata
Group was founded in 1868 by Jamsetji Tata as a trading company. It has operations in more
than 80 countries across six continents. Tata Group has over 100 operating companies with
each of them operating independently. Out of them 32 are publicly listed. The major Tata
companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata
Chemicals, Tata Global Beverages, Tata Teleservices, Titan Industries, Tata
Communications and Taj Hotels. The combined market capitalization of all the 32 listed
Tata companies was INR 8.4 Trillion ($141.27 billion) as of July 2014. Tata receives more
than 58% of its revenue from outside India.
Products: Airline, Automotive, steel, IT, Electricity generation, Chemicals, Beverages,
Telecom, Hospitality, Retail, Consumer goods, Engineering, Construction, Financial
services.
Founded: 1868.
Slogan: "Improving the quality of life of the communities we serve".
This section lists the Tata companies and details their business and products:
Chemicals
 Tata Chemicals
 Rallis India
 Tata Pigments Limited
 General Chemical Industrial Products
 Brunner Mond
 Advinus Therapeutics
 Magadi Soda Company

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Consumer products
 Tata Salt
 I-shakti
 Casa Décor
 Tata Swatch
 Tata Global Beverages
 Tata Tea Limited is the world's second largest manufacturer of packaged tea
and tea products.
 Tata Starbucks, is a 50:50 joint venture company, owned by Starbucks
Corporation and Tata Global Beverages
 Eight O’clock Coffee
 Tetley
 Tata Coffee
 Himalayan, Mount Everest Mineral Water’s natural mineral water brand
 Tata Ceramics
 Infiniti Retail (Croma)
 Tata Industries
 Titan Industries
 Trent (Westside)
 Landmark Bookstores
 Tata Sky
 Crossword
 Voltas, consumer electronics company
 Tata International Ltd.
 Tanishq
 Fastrack, Largest & Trendiest Youth Fashion Brand in India
 Titan Eye+, World class Optical Stores from Titan Industries
 Tata Refractory’s
 Westland
Energy
 Tata Power is one of the largest private sector power companies.
 Tata Power Solar, a joint venture between Tata Power and BP Solar
 Hooghly Met Coke and Power Company
 Jamshedpur Utilities and Services Company
 Tata Power Delhi Distribution Ltd (Formerly Known as North Delhi Power
Ltd)
 Power links Transmission
 Tata Power Trading
 Tata Projects

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Engineering
 TAL Manufacturing Solutions
 Tata AutoComp Systems Limited (TACO)
 Hispano Carrocera
 Tata Motors, manufacturer of commercial vehicles (largest in India) and
passenger cars
 Jaguar Land Rover (Manager of Tata's British brands Jaguar cars & Land
Rover)
 Tata Daewoo Commercial Vehicle
 Tata Projects
 Tata Technologies Limited
 Tata Marcopolo
 Tata Consulting Engineers Limited
 Tata Cummins
 Telco Construction Equipment
 TRF
 Voltas Global Engineering Centre
 Tata Advanced Materials
 Tata Advanced Systems
 Tata Motors European Technical Centre
 Tata Petrodyne
 Tata Precision Industries
 Telcon Construction Equipment

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Information systems and communication
 Computational Research Laboratories
 INCAT
 Nelco
 Nelito Systems
 Tata Business Support Services
 Tata Consultancy Services Ltd. (TCS) is one of the world's largest IT
Services companies.
 Tata Elxsi
 Neotel
 Tata Interactive Systems
 Tata Teleservices
 Tata Teleservices (Maharashtra)
 Virgin Mobile India
 Tata Communications
 CMC Limited
 VSNL International Canada
 Tatanet, Managed connectivity and VSAT service provider

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Services
 Tata Sons
 TajAir
 AirAsia India
 Air Asia India joint venture with Air Asia
 The Indian Hotels Company
 Taj Hotels
 Vivanta By Taj
 The Gateway Hotels & Resorts
 Ginger Hotels
 Roots Corporation
 Tata Housing Development Company Ltd. (THDC)
 Tata Limited
 TATA AIG General Insurance
 TATA AIA Life Insurance
 e-Nxt Financials ltd.
 TKM Global, Logistics and Supply Chain
 Tata AG
 Tata Asset Management
 Tata Financial Services
 Tata Capital Financial Services Limited
 Tata International AG
 Tata Investment Corporation
 Tata Advanced Systems Limited
 Drive India Enterprise Solutions
 Mjunction services
 Tata Quality Management Services
 Tata Realty and Infrastructure Limited
 Tata Interactive Systems
 Tata Africa Holdings

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 Tata AutoComp Systems
 Tata Industrial Services
 Tata NYK
 Tata Services
 Tata Strategic Management Group
Steel
 Tata Steel
 Tata Steel Europe
 Tata Steel KZN
 Tata Steel Processing and Distribution
 JAMIPOL
 NatSteel Holdings
 Tata BlueScope Steel
 Tata Metaliks
 Tata Sponge Iron
 Tayo Rolls
 The Tinplate Company of India
 Tata Bearings
 TM International Logistics
Core sciences
 Tata Institute of Fundamental Research
 Tata Institute of Social Sciences

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Conclusion
I have studied and analyzed the whole project, “Accounting Standard 17: Its Application
In Corporate Sector”. From the study of the project I hereby conclude that the AS-17 the
“SEGMENT REPORTING” is been explained in detail. And its application in Corporate
Sector With reference to examples is been studied and put-on in the project.