Segment and Interim Reporting

Question 1

What is the objective of segment reporting?

Answer 1

To provide information about the different business activities in which an enterprises engages, as well as the varying economic environments in which it operates to help users of financial statements

Question 2

A component of an enterprise is an operating segment if?

Answer 2

1. It generates revenues and expenses in conjunction with business activities
2. The chief operating decision maker (CODM) regularly reviews its operating results to assess performance and make resource allocation decisions
3. Discrete financial information for the component is available

Question 3

Criteria for considering if two or more operating segments need to be combined

Answer 3

1. The nature of the products and services provided by each operating segment
2. The nature of the production process
3. The type or class of the customer
4. Distribution methods
5. If applicable, the nature of the regulatory environment

Question 4

Three FASB test for identifying operating segments for which separate disclosure is required

Answer 4

1. Revenue Test
2. Profit or Loss Test
3. Asset Test

Question 5

What is the revenue test for identifying operating segments?

Answer 5

It test if segment revenue, both external and intersegment, are 10% or more of the combined revenue, internal and external, of all reported operating segments

Question 6

What is the profit or loss test for identifying operating segments?

Answer 6

It test if segment profit or loss is 10% or more of the larger of the combined reported profit of all profitable segments or the combined reported loss of all segments incurring a loss

Question 7

What is the asset test for identifying operating segments?

Answer 7

It test if segment assets is 10% or more of the combined assets of all operating segments

Question 8

ASC 280 “Segment Reporting” requires the following “General Information” disclosure for each reportable operating segment

Answer 8

General Information
1. Factors used to identify reportable
operating segments
2. Types of products and services from
which the segment’s revenue is derived
from

Question 9

ASC 280 “Segment Reporting” requires the following “Segment Profit or Loss” disclosure for each reportable operating segment

Answer 9

Segment Profit or Loss
1. Revenue from external customers
2. Revenue from transactions with other
operating segments
3. Interest revenue and interest expense
4. Depreciation, depletion, and amortization
expenses
5. Unusual items
6. Equity in the net income of investee
accounted for by the equity method
7. Income tax expense or benefit
8. Other significant noncash items

Question 10

ASC 280 “Segment Reporting” requires the following “Total segment assets” disclosure for each reportable operating segment

Answer 10

Total segment assets
1. Investment in equity method affiliates
2. Expenditures for additions to long lived
assets

Question 11

FASB ASC Topic 270 “Interim Reporting” provides guidance on what?

Answer 11

It guides companies as to how to prepare interim statements, and also stipulates minimum disclosures to be provided in interim statements

Question 12

Two approaches in preparing interim reports

Answer 12

1.Treat the interim period as a discrete accounting period, standing own its own
2. Treat the interim period as an integral portion of a longer period (required method under FASB 270)