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Under Ind AS 108, an OPERATING SEGMENT is a component of an entity that:
AGenerates external revenue exceeding 10% of total revenue of the entity
BEngages in business activities earning revenues/incurring expenses, whose operating results are regularly reviewed by the CODM, and for which discrete financial information is available
CConstitutes a distinct geographical area of operation
DIs registered as a separate legal entity in the corporate group
Answer & Solution
Correct answer: B. Engages in business activities earning revenues/incurring expenses, whose operating results are regularly reviewed by the CODM, and for which discrete financial information is available
Para 5 of Ind AS 108 defines an operating segment by three conjunctive tests: (a) business activities, (b) results regularly reviewed by the CODM for resource allocation and performance assessment, and (c) discrete financial information available. The 10% quantitative test applies to REPORTABLE segments — a subsequent filter, not the segment definition itself. Legal-entity status and geography are not the criteria.
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