Flashcards in FAR-Segment Reporting Deck (17):
How many tests must be performed to determine if a segment must be separately reported?
There are three tests:
Revenue: Is 10% or more of total revenues
Profit/Loss: Is 10% or more of total combined operating profit
Asset Test: If segment's assets are 10% or more of firm total assets
In addition to the three tests for segment reporting, what additional test must be performed?
75% Test: The aggregate of reportable segments must be equal to at least 75% of of total revenues. If the 75% test is not met after the first 3 tests, then additional segments must be reported.
How large does a segment have to be for it to be required to be reportable?
Requires disclosures for segments that make up 10% or more of the business, thus making them a reportable business segment.
Do segments include goodwill?
Segments includes assets only (NO GOODWILL)
In segment reporting, what is the management approach?
Is when management evaluates a segment by activities such as revenues, expenses, and customers
For separately reported segments, what five things are required to be disclosed?
1. Total segment operating profit of loss
2. Amounts of certain I/S items such as operating revenues, depreciation, interest expense, tax expense, and significant non-cash expenses
3. Total segment assets
4. Total capital expenditures
5. Reconciliation of the following items: Revenues, Operating Profit, Assets
What is the requirement to disclose supplemental information about major customers?
If revenues from any one customer are more than 10% of total revenue
What is the limit for reportable segments?
10 segments has been determined to be the reasonable upper limit for the number of segments that a company must disclose.
What tests are performed for segment reporting of operations in different industries?
All tests and disclose all 3.
What tests are performed for segment reporting of Foreign Operations?
Revenue test and Asset test. Meet any 1, disclose all 3.
What tests are performed for segment reporting of Major customer or export sales?
Revenue test only. If met, then disclose only revenue.
Intercompany sales are eliminated for consolidation. How are they treated for segment reporting?
They are included to determine revenues for segment reporting purposes.
Are general corporate expenses included in segment expenses?
No. Not unless it is specifically stated that they are to be included. Some questions will ask for 'common expenses', but they include indirect operating expects, etc, but not general corporate expenses.
Which types of entities are subject to ASC 280 - Segment Reporting?
Only public companies have to report on segments per ASC 280.
What are the three tests that determine if a segment is reportable?
A segment is reportable if it contributes at least 10% of the total for segments of one or more of the following
What is the management approach?
A segment that represents any group of activities with revenues and expenses that is regularly evaluated by management as a SINGLE UNIT.