F-1- SEGMENT REPORTING

Question 1

Q: Name the four required disclosures for segments of an enterprise.

FAR 1-38

Answer 1

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

Question 2

Q: Define operating segment.

FAR 1-39

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

Q: Name two quantitative thresholds used in identifying reportable operating segments.

FAR 1-40

Answer 3

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

Question 4

Q: Describe the 10% test for identifying reportable segments.

FAR 1-41

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 operating segments.

• Reported profit or loss

The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, or
o The combined reported profit of all operating segments that did not report a loss, or
o The combined reported 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

Q: What is the 75% test for identifying reportable segments?

FAR 1-42

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

Q: What are the disclosure requirements for reportable operating segments?

FAR 1-43

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)
• Measurement criteria
• Reconciliations