Segment Reporting

Which of the following types of entities are required to report on business segments

FAS No. 131 requires that a public business enterprise report financial and descriptive information about its reportable operating segments.

Operating segment

management identifies as significant component: 1) generates revenue/expense 2) chief operating decision maker reviews results 3) proves financial information about operations

75% Revenue Rule

for other operating segmetns not meeting quantitative test: =sales to unaffiliated customers / consolidated revenues => 75% consolidated revenues

Reporting Segment Quantitative Test

1) revenue (internal & external) >= 10% combined revenues of all operating segments 2) operating segment profit/loss >= 10% of absolute value of MAX [combined operating positive profit of all segments, combo operating loss of all segments] 3) identifiable assets >= 10% of combined assets of all operating segments

revenues from foreign operations

Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales between geographical areas

An enterprise must report separate information about an operating segment if its assets are 10% or more of the combined assets of all operating segments.

True

An enterprise must report the interest revenue for each reportable segment if this information is normally reviewed by the chief operating decision maker.

True

If management judges that an operating segment is reportable in year 1 and is of continuing significance, information about that segment should be reported in year 2 even if it does not meet the requirements for reportability in year 2

True

An enterprise must report separately the costs and expenses incurred by each segment.

False

One of the requirements of segment reporting is to report cash flows for each reportable segment.

False

The method used for reporting segment information is the asset-liability approach

False