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T Ltd has three bus segments (Local, Inter-city, Contract Hiring). Management wants to aggregate Local and Inter-city for Ind AS 108 reporting. The chapter recommends an automated process whose FIRST analytical step is to:
AExtract segment-level financial data (revenue, expenses, assets, liabilities, metrics) and define the criteria for evaluating aggregation (nature of business, economic characteristics, customer base, pricing policies, risks & returns)
BDefer the segment decision to the auditor
CDrop Local from external reporting if profits are declining
DAggregate the segments and disclose them as one
Answer & Solution
Correct answer: A. Extract segment-level financial data (revenue, expenses, assets, liabilities, metrics) and define the criteria for evaluating aggregation (nature of business, economic characteristics, customer base, pricing policies, risks & returns)
Automation starts with data extraction at the segment level and definition of aggregation criteria. Ind AS 108 aggregation requires similar economic characteristics AND similar nature/customers/methods/regulatory environment — not just convenience or auditor judgment.
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