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Ind AS 108 applies a 10% test on REPORTED PROFIT OR LOSS. The denominator (i.e., the base against which a segment's reported profit/loss is measured) is:
AThe greater, in absolute amount, of (i) the combined reported profit of all profit-making segments and (ii) the combined absolute reported loss of all loss-making segments
BThe combined absolute amount of all segment profits plus all segment losses, added together
CThe combined reported profit of all segments (loss-making segments deducted from profit-making segments)
DThe entity's net profit before tax in the consolidated income statement
Answer & Solution
Correct answer: A. The greater, in absolute amount, of (i) the combined reported profit of all profit-making segments and (ii) the combined absolute reported loss of all loss-making segments
Para 13(b) specifies the denominator as "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." This prevents a segment with offsetting profits and losses from appearing immaterial when in fact it has a sizeable reported result on either side.
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