Chapter 5 International Financial Reporting Standards Part 2

Question 1

IAS 1 Presentation of Financial Statements, requires

Answer 1

classification of liabilities:
-current liabilities
-non-current liabilities

Question 2

Current Liabilities

Answer 2

1. Expected to settle in normal operating cycle
   2.. Held primarily for purpose of trading
2. Settled within 12 months of the balance sheet date
3. No right to defer until 12 months after the balance sheet date.

Question 3

Refinanced short -term debt under IFRS

Answer 3

Long-term if refinanced prior to the balance sheet date

Question 4

Refinanced short-term debt under GAAP

Answer 4

Long-term if refinancing is agreed prior to the balance sheet being issued

Question 5

Accounts payable on demand due to violation of debt covenants under IFRS

Answer 5

Current liability, unless lender issued waiver of 12 months by the balance sheet date

Question 6

Accounts payable on demand due to violation of debt covenants under GAAP

Answer 6

Current liability, unless lender issued waiver obtained by the annual report issuance date.

Question 7

Bank overdrafts under IFRS

Answer 7

Long-term if integral part of cash management netted against cash

Question 8

Bank overdrafts under GAAP

Answer 8

always treated as current liabilities

Question 9

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

Answer 9

Reporting liabilities and assets of uncertain timing, amount, or existence

Onerous contracts and restructuring costs

Environmental costs and nuclear decommissioning costs

Question 10

Under IFRS contingent liabilities are not on the balance sheet they are a

Answer 10

provision of liability with uncertain timing or amount.

Question 11

Under IFRS, Contingent liabilities are recognized on the balance sheet only when

Answer 11

1. There is a present obligation from past events
2. It is probable that there will be an outflow of resources.
3. A reliable estimate of the obligation can be made.

Question 12

Constructive obligation arises from

Answer 12

past actions or current statements indicating that a company will accept certain responsibilities

*No concept of constructive obligation in U.S. GAAP

Question 13

IAS 37 defines a contingent liability as a

Answer 13

• Possible obligation confirmed by occurrence or non-occurrence of a future event
  -Present obligation that is not recognized because: 1. No probable outflow of resources
  2. Amount of the obligation cannot be measured reliably

Question 14

A contingent liability is recognized under U.S. GAAP when

Answer 14

outflow is probable
only disclosed if outflow is possible, but not probable

Question 15

Under U.S. GAAP probable usually means

Answer 15

70-90%

Question 16

Under IFRS probable usually means

Answer 16

more likely than not, implying a threshold of just over 50%

Question 17

What is a provision?

Answer 17

liability of uncertain timing or amount

Question 18

Liability is a

Answer 18

present obligation from a past event that will arise in an outflow of benefits

Question 19

If there is no passed event, then

Answer 19

there is no obligation
no liability

Question 20

Past Events create two types of obligations

Answer 20

Legal obligation
Constructive Obligation

Question 21

When to recognize a provision

Answer 21

3 conditions need to be met

1. Present obligation whether legal or constructive a as result of some past event or obligating event
2. The outflow of economic benefits required to settle the obligation must be probable; probable is more than 50%; possible means less than 50%
3. There must be reliable estimate of outflow of economic benefits that is required to settle the obligation.

If not, then entity discloses contingent liability or nothing if probability of outflow of benefits is remote

Question 22

How to measure provisions

Answer 22

Best estimate of the expenditure required to settle the obligation at the end of the reporting period

This estimate of outcome and financial effect are determined by the judgment of the management of an entity, supplemented by experience of similar transactions, sometimes reports of independent experts

Question 23

Two ways to measure provisions

Answer 23

1. Expected Value: when measurement of provision involves a large population of items, then the provision is measured as weighted average of all possible outcomes by their probabilities
2. Single obligation is measured: provision would be set as most likely outcome

Question 24

Several considerations to look at when measuring provisions

Answer 24

risk and uncertainties: inflation
present value after 12 months
Future events
gains from disposals shall not be taken into account

Question 25

A provision is recognized as an

Answer 25

expense in the income statement

but sometimes can be capitalized into the cost of another asset

Question 26

Provision is reversed when outflow of resources is

Answer 26

no longer probable

Question 27

Can IFRS omit disclosures that can be expected to prejudice seriously the position of the enterprise in a dispute with other parties?

Answer 27

Yes

U.S. GAAP no such exemption

Question 28

Onerous Contracts

Answer 28

unfair contract in which the unavoidable cost of meeting the obligations of the contract exceed the economic benefits of the contract

Question 29

If company identifies contract as onerous,

Answer 29

provision must be made in amount of unavoidable costs of or fulfilling it and unavoidable costs can be either

Recognize provision for the lower of:
-Net cost of fulfilling the contract that means cost less some income from the contract or
-Penalty from non fulfillment of the contract whichever is lower

If onerous from entity’s own action, provision not recognized until that action happens.

Question 30

Restructuring

Answer 30

A program planned and controlled by management that changes either:

The scope of business or the manner in which business is conducted.

Question 31

Examples of restructurings:

Answer 31

The sale or termination of a line of business.
The closure of business locations in a country or region.
A change in management structure.
A fundamental reorganization that has a material effect on the nature and focus of the entity’s operations.

Question 32

Under I A S 37, a restructuring provision is recognized when:

Answer 32

Detailed formal plan for restructuring.
Valid expectation that the plan will be carried out.
Cost is reasonably estimable, and the period of time is reasonable.

U.S. G A A P: no recognition until a liability has been incurred.
Thus, I F R S most likely shows loss earlier.

Question 33

Contingent asset

Answer 33

probable asset that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of a future event.

Not recognized (I F R S), but should be disclosed when the inflow of economic benefits is probable.

I F R S: is recognized if realization is virtually certain.
G A A P: the asset should be realized before it can be recognized.

Question 34

I A S 19, Employee Benefits, covers all forms of

Answer 34

employee compensation and benefits.
Excludes share–based compensation.

Question 35

Four types of employee benefits:

Answer 35

Four types of employee benefits:
1. Short–term benefits (compensated absences and bonuses).
2. Post–employment (pensions, medical benefits, and other post–employment benefits).
3. Other long–term benefits (deferred compensation and disability benefits).
4. Termination benefits (severance pay and early retirement benefits).

Question 36

How many types of contingent liabilities are there?

Answer 36

Three

Probable
Possible
Remote

GAAP recognizes all 3

Question 37

Examples of Contingent Liablities

Answer 37

lawsuits
product warranties

*outcomes are uncertain
*amount of liability differs depending on estimated dollar amount of the liability and the likelihood of the event occurring.

Question 38

How do GAAP and IFRS require companies to record contingent liabilities

Answer 38

in accordance with 3 principles

1. full disclosure
2. materiality
3. prudence

Question 39

Probable contingent liabilities can be reasonably estimated and must

Answer 39

be reflected within financial statements

Question 40

Possible but not probable contingent liabilities are as likely to occur as not and need only be

Answer 40

disclosed in the financial statement footnotes

Question 41

Remote contingent liabilities are extremely unlikely to occur and

Answer 41

do not need to be included in financial statements at all

Question 42

Contingent liabilities adversely impact

Answer 42

a company’s assets and net profitability

As a result, knowledge of both contingencies and commitments is extremely important to users of financial statements because they:

represent the encumbrance of potentially material amounts of resources during future​ periods,

and thus affect the future cash flows available to creditors and investors.
also important for potential lenders to a company, who will take these liabilities into account when deciding on their lending terms.

Question 43

Short-term benefits

Answer 43

recognize an expense and a liability at the time the employee provides services.​

Amount recognized is undiscounted.​

Compensated absences (for sick/vacation pay) accrue when services are provided only if:​

The compensated absences accumulate over time.​

They can be carried forward to future periods.​

Question 44

Short-term benefits For non–accumulating compensating balances,

Answer 44

an expense and liability are recognized only when the absence occurs.​

Question 45

Profit–sharing and bonus plans

Answer 45

An expense and a liability are accrued if:​

The company has a present legal or constructive obligation to make such payments as a result of past events.​

The amount can be reliably estimated.​

Question 46

Post–Employment Benefits

Answer 46

I A S 19 distinguishes between defined contribution plans and defined benefit plans.​

Question 47

Defined contribution plan:​

Answer 47

Benefits accrue when services are rendered.​

Liability reduces when contributions are made.​

Question 48

Defined benefit plan (generally similar to U.S. G A A P).​

Two major issues:​

Answer 48

Calculation of the net defined benefit liability (or asset).​

Calculation of the defined benefit cost.​

Question 49

Net Defined Benefit Liability (Asset)

Answer 49

Balance sheet amount calculated as:
+ Present value of the defined benefit obligation (P V D B O).
− Fair value of plan assets (F V P A).

Asset recognized is limited to the lower of:
The surplus.
or
The asset ceiling (present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan).
No asset ceiling under U.S. G A A P.

Question 50

(PVDBO) Present Value of the Defined Obligation

Answer 50

is based on assumptions related to variables such as employee turnover, life expectancy, and future salary levels.

Question 51

The discount rate used to determine PVDBO is determined by reference to the

Answer 51

yield at the end of the period on high-quality corporate bonds

Question 52

When does a deficit exist in a benefit plan?

Answer 52

when PCDBO is > (FVPA) Fair Value of Plan Assets

Question 53

When a deficit exits in a benefit plan the amount reported is the

Answer 53

Net Defined Benefit Liability and gets reported on the Balance Sheet

Question 54

When FVAP is > FVDBO, the a ____ exists.

Answer 54

Surplus

Question 55

When a surplus exists in a benefit plan. the amount of the net defined asset is recognized at

Answer 55

the lower of:

Surplus
or
Asset ceiling

which is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan

Question 56

Does an asset ceiling exist in GAAP?

Answer 56

No

Question 57

Components of defined benefit cost reported in net income:

Answer 57

-Current service cost.
-Past service cost and gains and losses on settlements.
-Net interest on the net defined benefit liability (asset).

Question 58

I A S 19: all past service costs should be

Answer 58

expensed in the period in which the benefit plan is changed; regardless of the status of the employees benefiting from the change

Question 59

U.S. G A A P: the past service cost should be recognized in

Answer 59

other comprehensive income (O C I).

Question 60

(NIDBA) Net Interest on the Net Defined Benefit Liability (Asset)

Answer 60

is determined by multiplying
the net defined liability asset by the same discount rate used to measure PVDBO

It is the difference between interest expense (PVDBO x Discount Rate) and interest Income (FVAP x Discount Rate)

Question 61

Past service cost arises when

Answer 61

an employer improves the benefits to be paid to employees in a defined benefit plan.

Question 62

Does IAS provide separate guidance for other post-employment benefits?

Answer 62

No, U.S. GAAP provides more guidance

Companies using IFRS are allowed by IASB’s Framework to use Guidance provided by U.S. GAAP to identify an appropriate method.

Question 63

Other Long–Term Employee Benefits-Liability should be recognized equal to the difference between:

Answer 63

The present value of the defined benefit obligation.
The fair value of plan assets (if any).

Question 64

I F R S 2, Share–Based Payment, sets out measurement principles and specific requirements for three types of share–based payment transactions:

Answer 64

1. Equity–settled share–based payment transactions.
2. Cash–settled share–based payment transactions.
3. Choice–of–settlement share–based payment transactions.

IFRS 2 and U.S. GAAP are substantially similar

Question 65

Equity–Settled Share–Based Payment Transactions

Answer 65

Share–based payments to nonemployees.
I F R S measurement:
Fair value of the goods or services, if it can be reliably determined.
Fair value of the equity instruments.

Question 66

Equity–Settled Share–Based Payment Transactions

Answer 66

Share–based payments to nonemployees.
U.S. G A A P measurement:
Fair value of the instrument at the earlier date of either:
A commitment for performance.
When the performance is completed.

Question 67

Equity–Settled Share–Based Payment Transactions

Answer 67

Share–based payments to employees.
Measured at the fair value of the equity instruments.
Consider vesting conditions.
Total compensation cost.
Recognized as compensation expense.

Question 68

Equity–Settled Share–Based Payment Transactions

Answer 68

The estimate of options expected to vested should be revised throughout the vesting period.
Recognition of associated compensation expense.
Straight–line over the service period for cliff vesting.
Amortize each installment (or tranche) over its vesting period for graded vesting.
U.S. G A A P allows choice of accelerated or straight–line recognition.

Question 69

Modification of Stock Option Plans-Types of modification:

Answer 69

Length.
Vesting conditions.
Exercise price.

Question 70

Modification of Stock Option Plans-Result of fair value change

Answer 70

Increase in fair value;
Increase compensation cost by the same amount.
Decrease in fair value.

No change in compensation; cost deducted.

Question 71

Modification of Stock Option Plans

Answer 71

U.S. G A A P.
The fair value determines compensation expense.
Unlike I F R S, there is no minimum compensation.

Question 72

Cash–Settled Share–Based Payment Transactions- Cash payment when the stock price

Answer 72

increases above a predetermined level.

Question 73

Cash–Settled Share–Based Payment Transactions-Recognize fair value as a

Answer 73

liability and expense using an option–pricing model.

Remeasure at each balance sheet date.
The change in fair value goes to net income.

Question 74

Cash–Settled Share–Based Payment Transactions- Under U.S. G A A P, classify certain cash–settled payments as

Answer 74

Equity;

under IFRS classify as a Liability

Question 75

Choice–of–Settlement Share–Based Payment Transactions

Answer 75

Allow the entity to choose between equity settlement and cash settlement.
If the entity has a present obligation to settle in cash, treat as cash–settled.
If obligation settled in equity, treat as equity–settled.

Question 76

Choice–of–Settlement Share–Based Payment Transactions 2

Answer 76

Treat as compound financial instrument when receiving entity chooses equity settlement or cash settlement.
Fair value split into separate debt and equity components.
Debt component must be remeasured at fair value for every balance sheet date.
Change in fair value impacts income.

Question 77

Choice–of–Settlement Share–Based Payment Transactions 3

Answer 77

Apply the cash settlement against the debt component only.
In an equity settlement, transfer the debt component to equity

Question 78

I A S 12, Income Taxes, and U.S. G A A P take a similar approach.
Asset–and–liability approach:

Answer 78

Recognizes deferred tax assets and liabilities:
For temporary differences.
For operating loss and tax credit carryforwards.

Under I F R S, measure on the basis of tax laws and rates that have been enacted or substantively enacted.

Under U.S. G A A P, measure on the basis of actually enacted tax laws and rates.

Account for double taxation effects and differences in rates (dividends).

Question 79

Recognition of deferred tax asset

Answer 79

Under I F R S, recognize if future realization of a tax benefit is probable.
I A S 12 provides a more stringent threshold.
Under U.S. G A A P, recognize if realization is more likely than not.
“Probable” is a higher threshold than “more likely than not”.

Question 80

Income Taxes-Recognition of deferred tax asset-Disclosures:

Answer 80

I F R S requires.
Extensive disclosures of tax expense.
Explanation of hypothetical expense based on two approaches:

1. Compare statutory tax expense in the home country and effective tax expense.
2. Compare weighted-average statutory tax rate across jurisdictions and tax expense based on the effective tax rate.

Question 81

Income Taxes

Answer 81

I F R S versus U.S. G A A P.
I F R S application can cause temporary differences unknown under U.S. G A A P.

Question 82

Income Taxes: Financial statement presentation

Answer 82

Under U.S. G A A P:
Based on the classification of the related asset or liability, deferred tax assets and liabilities are classified as either:
Current.
Noncurrent.

Tax loss or credit carryforwards.
Based on the expected timing of realization.

Under IAS 1:
Deferred tax assets and liabilities.
Only classified as noncurrent.

Question 83

Revenue Recognition

Answer 83

Most significant example of cross–border cooperation in accounting standard–setting.
Five steps in the recognition of revenue:
Identify the contract with a customer.
Identify the separate performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price to the separate performance obligations.
Recognize the revenue allocated to each performance obligation when the entity satisfies each performance obligation

Shift from the evaluation of the risk and rewards of ownership to the transferal of control.

Question 84

Revenue Recognition - Bill–and–hold sales:

Answer 84

seller segregates inventory meant for a customer but still maintains physical possession of it.
Has the product been separately identified as belonging to the customer?
Is the product ready for shipment to the customer?
Can the seller use the product or reallocate it to another customer?
Is there a substantive business reason for the bill–and–hold arrangement, such as, that the customer’s warehouse is full?

Question 85

Customer Loyalty Programs-I F R S 15: award credits should be treated as

Answer 85

a separately identifiable component of the sales transaction in which they are granted.

The revenue allocated between awards credits (liability) and current sale is based on their fair value.

When credit is used, transfer from liability to revenue.

Question 86

Financial Instruments-3 Standards

Answer 86

I A S 32, Financial Instruments: Presentation.
I F R S 7, Financial Instruments: Disclosure.
I F R S 9, Financial Instruments–issued in November 2009 to replace I A S 39.

Question 87

IAS 32: a financial instrument is any

Answer 87

contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Question 88

Financial asset:

Answer 88

A contractual right to:
Receive cash or another financial asset.
Exchange financial assets or financial liabilities under potentially favorable conditions.
An equity instrument of another entity.
A contract that will or may be settled in the entity’s own equity instruments and is not classified as an equity instrument of the entity.

Do not include investments that are part of consolidation or accounted for under the equity method.

Must have less than significant influence to be considered a financial instrument

Question 89

Financial liability:

Answer 89

A contractual obligation to:

Deliver cash or another financial asset.

Exchange financial assets or financial liabilities under potentially unfavorable conditions.

A contract that will or may be settled in the entity’s own equity instruments.

Equity instrument: any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Question 90

Exclusions to IAS 32 and IFRS 9

Answer 90

Insurance contracts.
An employer’s rights and obligations under employee benefit plans.
Share–based payment programs.
Transactions in the entity’s own equity instruments, such as treasury stock.

Question 91

I A S 32.
Financial instruments to be classified as:

Answer 91

Financial liabilities.
Equity.
Both.

Question 92

If an equity instrument contains a contractual obligation that qualifies as a financial liability, it is classified as

Answer 92

a liability.

For example, preferred stock that can be redeemed by the shareholder.

Question 93

Compound Financial Instruments

Answer 93

Both a liability and equity element.

For example, a convertible bond.

Split accounting.

Show as part debt and part equity.

The with–and–without method:

-The fair value of the financial instrument with the conversion feature.
-The fair value of the financial instrument without the conversion feature.
-The difference between the fair value as a whole and the amount determined for the liability component.

Question 94

Classification and Measurement of Financial Assets and Financial Liabilities: 3 Categories of Financial assets:

Answer 94

1. Amortized cost: Two Tests (business model and contractual cash flow)
2. Financial assets at fair value through OCI (FVOCI): same two tests (business model and contractual cash flow).
3. Financial assets at fair value through profit or loss (FVPL).

Question 95

Business model:

Answer 95

the business objective must be to hold the assets in order to collect contractual cash flows.

Question 96

Contractual cash flow test:

Answer 96

the asset must give rise to only interest and principal payments.

Question 97

Categories of Financial Liabilities

Answer 97

Must be classified as either:
1. Financial liabilities at fair value through profit or loss (income).

Liabilities held for trading.

Derivatives not designated as part of a hedging relationship.

Liabilities classified under special rules providing a “fair value option”.

2. Financial liabilities measured at amortized cost.

Default category for those not in first list.

Question 98

Three stages of impairment:

Answer 98

1. Insignificant deterioration: estimates a probability of loss over the next 12 months and records a loss provision.
   Interest revenue is based on original value.
2. Significant deterioration: estimates the probability of loss over the loan’s remaining life and records a loss provision
   Interest revenue is based on original value.
3. Credit impaired: estimates the probability of default over the loan’s remaining life and records a loss provision.

Interest revenue is based on impaired value.

Question 99

U.S. standard does not distinguish between insignificant

Answer 99

and significant deterioration.
American accountants apply Stage Two treatment to all loans.

Question 100

Derivatives

Answer 100

Options, forwards, futures, and swaps whose value changes in response to a change in a specified:
Interest rate.
Financial instrument price.
Commodity price.
Foreign exchange rate.
Index.
Credit rating.
Other variable.

Question 101

IFRS 9

Answer 101

Derivatives measured at fair value.

If classified as a hedge, change in value to O C.
if not classified as a hedge, change in value to income.

Question 102

Sales of Receivables

Answer 102

Question as to whether sold or simply collateral for a loan.
If sold, remove receivables from books.
If collateral, show receivables and liability for loan.

Question 103

Sales of Receivables-Pass-through arrangement.
Considered a loan unless all three conditions are met:

Answer 103

1. The entity has no obligation to pay cash to buyer of the receivables unless it collects equivalent amounts from the receivables.
2. The entity is prohibited by terms of the transfer contract from selling or pledging the receivables.
3. The entity has an obligation to remit any cash flows it collects on the receivables to the eventual recipient without material delay.

Question 104

Leases

Answer 104

Account for virtually all leases using the finance lease model.
Signing a lease agreement triggers balance sheet recognition of:

Right–of–use asset (leasehold asset).
Depreciates over life of the lease.

Corresponding lease liability: reduced through effective interest method.

Similar to the new U.S. F A S B dealing with leases.

Question 105

Disclosure and Presentation Standards: Statement of Cash Flows

Answer 105

I A S 7 requirements

Must be classified as being related to operating, investing, or financing activities.

Operating: direct or indirect method.

No reconciliation required with direct method.

Cash flows related to interest, dividends, and income taxes must be reported separately.

Interest and dividends paid can be classified as operating or financing.

Interest and dividends received can be classified as operating or investing.

Income taxes are classified as operating unless specific to investing or financing activities.

Noncash investing and financing are excluded but disclosed elsewhere within the financial statements.

Cash and cash equivalents reconciled with the balance sheet but need not agree with a single line item on the balance sheet.

Distinction between bank borrowings and bank overdrafts.

Latter may be considered reduction of cash or financing activity.

Question 106

Disclosure and Presentation Standards: Statement of Cash Flows: U.S. GAAP

Answer 106

Interest paid, interest received, and dividends received are all classified as operating cash flows.

Dividends paid are classified as financing cash flows.

When using the indirect method, the reconciliation from income to cash flows must begin with net income.

When using the direct method, a reconciliation from net income to operating cash flows also must be presented.

The cash and cash equivalents line item in the cash flow statement MUST reconcile with the cash and cash equivalents line in the balance sheet.

Question 107

Events after the Reporting Period: TWO TYPES

Answer 107

1. Adjusting events: provide evidence of conditions that existed at the end of the reporting period.
   Must be recognized through adjustment of the financial statements.
2. Non-adjusting events: conditions that arise after the balance sheet date but before the statements have been issued.

Not recognized on financial statements, but disclosures are required of:

1. The nature of the event.
2. An estimate of the financial effect, or a statement that an estimate cannot be made.

Question 108

Selection of Accounting Policies.

Answer 108

Hierarchy of authoritative pronouncements:

I A S B Standard or Interpretation of the transaction/event.
I A S B Standard or Interpretation of similar transaction/event.
Definitions, recognition criteria, and measurement concepts in the I A S B Framework.
Most recent pronouncements of other standard–setting bodies that use a similar conceptual framework.

Question 109

Changes in Accounting Policy.
Allowed ONLY if:

Answer 109

It is required by an I F R S.
Results in statements that are more relevant and reliable.

Question 110

Changes in Estimates: a change in estimate should be handled

Answer 110

prospectively.

Question 111

Correction of Errors: errors should be corrected

Answer 111

retrospectively by restating all prior reported accounts through retained earnings.

Question 112

Related Party Disclosures: must be disclosed in

Answer 112

footnotes.

Question 113

Earnings per Share: both basic and diluted must be reported on the

Answer 113

face of the income statement.

Question 114

Interim Financial Reporting

Answer 114

No mandate on:
Who needs to do them.
How frequently.
Time from the end of the period to the release of an interim report.
Does define the minimum content to be included as required by national jurisdiction.
Discrete reporting periods versus. U.S. G A A P integral part of full year.

Question 115

Noncurrent Assets Held for Sale

Answer 115

Shown separately on balance sheet.
Shown at the lower of either:
1. Carrying Value
2. The FV - costs to sell

Not Depreciated

Question 116

Operating segments are components of a business:

Answer 116

That generate revenues and expenses.
Whose operating results are regularly reviewed by the chief operating officer.
That has separate financial information available.

Question 117

Three quantitative tests to be an operating segment:

Answer 117

Revenue test.
Profit or loss test.
Asset test.

Question 118

Operating Segment Disclosures

Answer 118

Assets.
Capital expenditures.
Liabilities.
Profit or loss:

External revenues.
Intercompany revenues.
Interest income and expense.
Depreciation and amortization.
Equity method income.
Income tax expense.
Noncash expenses.

Revenue of all segments must be at least 75% of total revenues