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FAR > Segment Reporting - 20C > Flashcards

Segment Reporting - 20C Flashcards

1
Q

Disclosure about segments is only required when?

A

When a company is publicly traded

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2
Q

What is the management approach to breaking a company up into segments?

A
  1. Earn revenue and expenses
  2. Chief decision maker reviews operating results for resource allocation and performance
  3. Financial information is already available
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3
Q

What are the types of segments?

A
  1. Cost Centers - Only have expenses (not an operating segment because there is no revenue)
  2. Profit Centers - Have revenues & expenses
  3. Investment Centers - Revenues, expenses, & substantial investments in PPE
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4
Q

What are the thresholds for an operating segment?

A

10% or more of:

  1. Combined Revenue OR
  2. the greater of Absolute Value of Combined Profit/Loss; OR
  3. Combined Assets
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5
Q

What is the 75% test, and how is applied?

A

The 75% Test is a test to ensure that 75% of total Sales or Revenue is made up of unaffiliated segment revenue.

Segment consolidated sales (or revenue) reported from Combined Revenue, Combined Profit/Loss, & Combined Assets must be greater than 75% of the total consolidated revenue

Must use unaffiliated revenue

If the 75% test is not met, pick up the next biggest segment by consolidated sales to bump over the 75%

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6
Q

What are other terms for Consolidated Revenue?

A

Unaffiliated or External

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7
Q

When is a company allowed to report using the aggregate of the reporting segments?

A
  1. To do so would be consistent with the standard
  2. The segments must have similar characteristics AND
    3a. Before performing 10% tests, the segments are similar in all of the following: OR
    3b. After performing 10% tests, they don’t meet any of the tests, but are similar in a majority of the following:
    • Nature of products & services
    • Nature of production bases
    • Methods used to distribute products or provide services
    • If applicable, nature of the regulatory environment
    • Type of customer
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8
Q

How may management segment their company?

A
  1. Products or services
  2. Geography
  3. Legal Entity
  4. Type of Customer
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9
Q

What is reported for each operating segment?

A
  1. Revenues
  2. Expenses
  3. Profits
  4. Asset & equity method investments
  5. Unusual or extraordinary items
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10
Q

What general information must be disclosed?

A
  1. Factors used to ID the reportable segments
  2. Types of products & services for each segment
  3. Reconciliations for Revenue, P/L, & Assets
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11
Q

What geographic area information must be disclosed?

A
  1. External revenues, domestic & foreign
  2. Assets & expenditures for assets, domestic & foreign
  3. Reconciliation for revenue & assets
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12
Q

What major customer information must be disclosed?

A
  1. 10% or more of consolidated revenue
  2. U.S. or foreign government
  3. Reconciliation for revenue
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13
Q

What is consolidated revenue?

A

Revenue that is found on the the consolidated financial statements

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14
Q

The 75% test uses what?

A

Consolidated (unaffiliated) Sales

IFRS uses Consolidated Revenue

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15
Q

Disclosing Major Customers is based off what?

A

Consolidated (unaffiliated) Revenue

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16
Q

Chief Operating Decision Maker describes what?

A

A specific function, but not necessarily a title of an individual position

17
Q

Major customer data should be disclosed if?

A

Total sales to one specific customer is greater than 10% of Total Revenues

18
Q

Under IFRS, what are the three threshholds for determining if an operating segment is a reportable segment?

A
  1. The segment revenue is 10% or more of combined revenue of all segments
  2. The aboslute value of the segment profit or loss is 10% or more than the greater of the a)combined reported profit of all segments not reporting a loss or b)combined reported loss of all segments reporting a loss
  3. The segment assets are 10% or more of the combined assets of all segments
19
Q

Does ASC Topic 280 apply to Not for Profit or Nonpublic Enterprises?

A

No

20
Q

What is the approach used to determine what information to report for bisiness segments?

A

Management Approach

FAR (28 decks)

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