Chapter 8: Segment and Interim Reporting

ASC 280

FASB codification topic on SEGMENT reporting

Management Approach

Identifying segments the way management organizes the business internally

Operating Segment

Segment that earns revenues and incurs expenses, results regularly reviewed by the Chief Operating Decision Maker

Chief Operating Decision Maker (CODM)

The person or group that reviews segment results to assess performance and allocate resources

Discrete Financial Information

Separate financial data available for a component

Aggregation (Combination) Criteria

Products or services, production process, type of customer, distribution methods, regulatory environment

Reportable Segment

An operating segment that meets at least ONE 10% test or is added to reach 75%

Revenue Test

Segment revenues (including intersegment) ≥ 10% of combined revenues of all segments

Profit or Loss Test

Segment profit or loss ≥ 10% of the larger of combined profits or combined losses

Asset Test

Segment assets ≥ 10% of combined assets of all segments

Intersegment Revenue

Sales to other segments of the same company; included in the revenue test, excluded from the 75% test

75% Test

Reportable segments’ external revenues must be ≥ __% of total external revenues

All Other Category

Where segments that are not reportable are combined and disclosed

Reconciliation

Bridging segment totals to consolidated revenues, income before taxes, and total assets

Geographical Area Information

Revenues from external customers and long-lived assets for the home country, all foreign countries in total, and each material foreign country

Major Customer

A single external customer providing ≥ 10% of consolidated revenues

IFRS 8

International segment standard; requires segment liabilities if reported to the CODM and includes intangibles in long-lived assets

ASC 270

FASB codification topic on INTERIM reporting

Interim Report

Financial statements for a period SHORTER than a year, usually a quarter

Integral Approach

Treats each quarter as part of the year; costs can be allocated across quarters, required by U.S. GAAP

Discrete Approach

Treats each quarter as standing alone; costs are expensed when incurred, used by IAS 34

IAS 34

International Standard on Interim Reporting

Estimate Annual Effective Tax Rate

The rate applied to interim income to compute interim income tax expense

Net Realizable Value (NRV) Decline - Interim

Not written down if NRV is expected to recover above cost by year-end

LIFO Liquidation - Interim

Not recorded if the inventory is expected to be replaced by year-end

Minimum Interim Disclosures

Revenues, taxes, net and comprehensive income, EPS, seasonal items, estimate changes, contingencies, significant changes in financial position. A balance sheet and cash flow data are encouraged, not required.