Segment Reporting

Question 1

What is the objective of segment reporting

Answer 1

To provide information on the business activities and the economic environment of a company to help users of the financial statements

Question 2

Segment reporting help users of the financial statement

Answer 2

Better understand the enterprise’s performance
Better assesses its prospects for future net cash flows
Make more informed judgments about the enterprise as a whole

Question 3

Quantitative Thresholds

A segment meet Size Test is 10% of

Answer 3

Revenue is 10% or more of the combined revenue of all operating segments
Assets are 10% or more of the combined assets of all operating segments
Absolute amount of profit or loss is 10% or more of the greater of (1) and (2)
(1) absolute amount of combined loss of all operating segments that reported a loss
(2) absolute amount of combined profit of all operating segments that did not report a loss

Question 4

75% Reporting Sufficiency Test

Answer 4

If total external revenue is less than 75% of entity’s revenue,

• • additional operating segments become reportable segments
• • even if they do not meet the quantitative thresholds
• • until reportable segments include
• • 75% or more of revenue reported by operating segments

Question 5

ALL Other Segment

Answer 5

other business activities and operating segments that are not reportable based on the Quantitiatve threshold reporting segment s/b be