Question

1. You have completed the Cash Flow statement. Pleased with your work so far, Barry asks you to work on an assignment for Steve Fox, relating to a different Regal subsidiary, Phrygian Equipment Capital. Phrygian has two business segments that are reported separately in its financial statements. The segments are “machinery” and “investment and Insurance.” In its management accounts, the company reports four different divisional results. The four divisions are machinery leasing, machinery sales, investments, and insurance. The results of the segments and the divisions follow:

	Revenue External $m	Revenue Internal $m	Segment results (profit/loss) $m	Segment assets $m	Segment liabilities $m
Machinery:
Leasing	180	20	32	194	50
Sales	110	15	(4)	24	22
FS Disclosure Amount	290	35	28	218	72
Investment and Insurance:
Investment	120	130	80	192	65
Insurance	60	8	(53)	116	95
FS Disclosure Amount	180	138	27	308	160
Total	470	173	55	526	232

Steve has asked you for a technical analysis on how Phrygian should report its segment information, under IAS 14, as of its year-end of December 31, 2017

Answer 1

According to IAS 14 the substance's reportable portions are its business and geological fragments for which a larger part of their income is earned from deals to outside clients and for which: [IAS 14.35]

• income from deals to outer clients and from exchanges with different fragments is 10% or a greater amount of the complete income, outside and interior, all things considered; or
• fragment result, regardless of whether benefit or misfortune, is 10% or more the consolidated aftereffect of all sections in benefit or the joined consequence of all portions in misfortune, whichever is more prominent in total sum; or
• resources are 10% or a greater amount of the absolute resources of all portion.

so in the given issue all sections have larger part of their income earned structure outer client aside from Investment one.

Presently Leasing office and deals office is reportable on the grounds that its deals to outer clients surpass 10% of all out income for example 10% of (470+173 = 643) = 64.30

Furthermore, protection division will be reportable on the grounds that its absolute resource surpass 10% of all out resource for example 10% of 526 = 52.60

Presently according to IAS 14.37 If all out outside income inferable from reportable fragments distinguished utilizing the 10% edges sketched out above is under 75% of the all out combined or element income, extra sections ought to be recognized as reportable portions until at any rate 75% of absolute solidified or substance income is incorporated into reportable portions.

So now every one of the three reportable portions added up to outer income of 350 that is under 75% of substance income so we will likewise consider venture division so as to fulfill the state of 14.37.

So toward the end each of the four divisions will be considered as reportable fragment.

Presently according to prerequisites of IAS 14.51-67 element ought to uncover following data for essential sections:-

• deals income (recognizing outside and intersegment)
• result
• resources
• the premise of intersegment estimating
• liabilities
• capital increments
• deterioration and amortization
• huge strange things
• non-money costs other than deterioration
• value technique pay

For auxiliary fragments, reveal: [IAS 14.69-72]

• income
• resources
• capital increments