Personal F/S, Segment Reporting and Interim Reporting

Question 1

What items are required for disclosure on reporting segments?

Answer 1

FASB ASC 280-10-50-22 specifically lists the following as requiring disclosure:

Revenues from external customers
Revenues from transactions with other operating segments of the same enterprise
Interest revenue
Interest expense
Depreciation, depletion, and amortization expense
Unusual items as described in FASB ASC 225-20
Equity in the net income of investees accounted for by the equity method
Income tax expense or benefit
Significant noncash items other than depreciation, depletion, and amortization expense

Rent expense is not one of the items that requires disclosure.

Question 2

Segment Reporting steps
Each individual segment must be > 10% of total Assets, Profit/Loss, Revenue for all the Segments combined.

10% of P/L in absolute terms. So 10% of Profit and 10% of Loss. Pick larger number, then use to determine.

Answer 2

Those meeting 10% test must in total be > 75% of total unaffiliated Revenue

Question 3

A reportable operating segment is a component of an enterprise:

That engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same enterprise),
Whose operating results are regularly reviewed by the enterprise's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
For which discrete financial information is available.

Answer 3

“Generally, an operating segment has a segment manager who is directly accountable to and maintains regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts, or plans for the segment.”

Question 4

Max number of reportable segments?

Answer 4

10!

Disclose P/L and Total assets of EACH reportable segment.

Question 5

Financial reporting of periods < 1 year are INTERIM Reporting, generally quarterly. Have two views:

Answer 5

Discrete View - each interim period is separate accounting period, standalone, same principles as annual.

Integral View - each period is integral part of annual, special accruals and deferrals, same accounting principles.

Question 6

Ignore temporary declines in Market Value of inventory. No Gain or Loss recorded. Record LOSS if thought to be permanent at that time.

Answer 6

When MV goes up, recover up to the loss, never value inventory > its cost i.e. what it recovers up to.
If losses recognized in early interim periods are recovered in the same year, such recoveries are recognized as gains in the appropriate interim periods.

Question 7

Allocation evenly of major repairs, property taxes, etc if benefits more than one interim period.
EXPENSE x #months in interim period/#months it would have existed.

Answer 7

ex: 3 months in interm period for a policy lasting 6 = 3/6 * expense. Allocate to that period.

Question 8

Recognize in income the discontinued operations in interim INCURRED, disclose on the interim report.

Answer 8

Same for extraordinary items.

Question 9

Income taxes = Current tax liability - Expense prior quarters
Current tax liability = (Current Income + Prior Income) x Eff Rate as of this period
Then subtract expense from prior periods.

Answer 9

use the EFFECTIVE rate EXPECTED for the the year as of the end of that quarter. Ignore statutory..