alleryStart learning →How is an allocation that outsiders perceive as arbitrary treated?
ANot a reasonable allocation basis
BCompulsory for all segments
CFine if management accepts it
DFine if applied every year
Answer & Solution
Correct answer: A. Not a reasonable allocation basis
An allocation that external users would see as arbitrary does not meet the reasonable basis test even if management understands it.
Keep practising AS 17 Segment Reporting
Browse all AS 17 Segment Reporting questions for CA Inter, or explore more Accounting topics.
Related questions
Segment result includes interest expense. Segment liabilities then include what?Each business segment must be described by indicating what?A change in how revenues and expenses are allocated to segments leaves what unchanged?A material segment policy change needs nature and what else?On what basis are inter-segment transfers measured?If geography is primary, what is reported for large business segments?With business segments primary, which geographical segments need secondary revenue data?The reconciliation ties segment result to which enterprise item?