Finacial Statement Disclosures Flashcards
What is an operating segment?
1) engages in business activities from which it may earn revenues or incur expenses,
(2) has operating results that are regularly reviewed by the entity’s chief operating decision maker
(3) has discrete financial information available
What are the 3 quantitative thresholds for a segment
1) Reported revenue is at least 10% of the combined revenue of all operating segments (External and internal transfers)
(2) reported profit or loss is at least 10% of the greater of the combined reported profit of all operating segments that did not incur a loss, or the combined reported loss of all operating segments that did report a loss;
(3) its assets are at least 10% of the combined assets of all operating segments.
What information should a public entity present about geographic areas
1) external revenues attributed to the home country, (
2) external revenues attributed to all foreign countries, (3) material external revenues attributed to an individual foreign country,
(4) the basis for attributing revenues from external customers
(5) certain information about assets.
what is the full disclosure principle
Information capable of affecting user decisions should be reported
What are accounting policies
Specific principles and methods of apply them
What is the preferred presentation of disclose for accounting policies
Summary of police after the note or with in the more
What should the disclosure include
Principles adopted and the methods of applying them that materially affect the financial statement
what does disclosure also extends to
- A selection from existing acceptable alternatives,
- Policies unique to the industry in which the entity operates, even if they are predominantly followed in that industry, and
- GAAP applied in an unusual or innovative way.
What are the 6 disclosures that are normally required
Basis of consolidation
Depreciation methods
Amortization of intangibles
Inventory pricing
Recognition of revenue from contracts with customers
Recognition of revenue from leasing operations
What shouldn’t disclosures of accounting policies do?
Report information that is presented somewhere else
When should operating segment be aggregated
Doing so is consistent with the objective;
They have similar economic characteristics; and
They have similar products and services, production processes, classes of customers, distribution methods, and regulatory environments.
What happens if the total external revenue of the operating segments meeting the quantitative thresholds is less than 75% of consolidated revenue
additional operating segments are identified as reportable until the 75% level is reached.
What happens to other segments that do not meet the threshold
segments is combined and disclosed in an all other category as a reconciling item.
What must be included in the reported amount of a reportable operating segment’s assets?
Item used by chief operating decision maker for purposes of making resource allocation and performance evaluation decisions regarding the segment
What should happen when a customer makes up 10% or more of revenue
(1) that fact
(2) the amount of revenue from each such customer
(3) the segment(s) reporting the revenues must be disclosed by the public entity in its financial statements.
