F1 - Segment Reporting

Question 1

Name the four required disclosures for segments of an enterprise.

Answer 1

• Operating segments
• Products and services
• Geographic areas
• Major customers

Question 2

Define operating segment.

Answer 2

Distinct revenue-producing components of the enterprise about which separate financial information is produced internally, and whose operating results are regularly reviewed by the enterprise.

Determined using a “management approach”.

Question 3

Name two quantitative thresholds used in identifying reportable operating segments.

Answer 3

• 10% “Size” test
• 75% “Reporting Sufficiency” test

Question 4

Describe the 10% test for identifying reportable segments.

Answer 4

Revenue
Reported revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the combined revenue, internal and external, of all reporting segments

Reported profit or loss
The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of

• The combined reported profit of all operatiing segments that did not report a loss, or
• The combined reproted loss of all operating segments that did report a loss.

Assets
Assets are 10% or more of the combined assets of all operating segments.

Note: Must meet only one of the above.

Question 5

What is the 75% test for identifying reportable segments?

Answer 5

Combined external (consolidated) revenue of all reportable segments must be at least 75% of the total consolidated revenue of the entity.

The practical limit is 10 segments, but this is not a precise limit.

Question 6

What are the disclosure requirements for reportable operating segments?

Answer 6

For each reportable segment, the entity must report:

• Identifying factors
• Products or services
• Profit or loss details
• Asset details
• Liability details (IFRS only)
• Measurements criteria
• Reconciliations