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Chapter 13 - Segment and Interim Reporting
Q13-1 Information on a company's operations in different industries would be helpful to
investors in their assessments concerning the different profit rates, different degrees and
Q13-2 The relationship between the FASB's segment disclosure requirements and a
Q13-3 The three ten percent significance tests used to determine reportable segments
under ASC 280 are the 10 percent revenue test, the 10 percent operating profit (loss)
test, and the 10 percent assets test.
For the 10 percent revenue test, the numerator and denominator are as follows:
Each operating segment's total revenue
(including intersegment transfers and sales)
Combined revenue of all operating segments
(including intersegment transfers and sales)
For the 10 percent profit (loss) test, the numerator and denominator are as follows:
Absolute value of each operating segment's profit
(loss)
Absolute value of the combined profit or
combined losses of the operating segments
(whichever is greater)
For the assets test, the numerator and denominator are as follows:
Each operating segment’s assets
Combined assets of all industry segments
excluding general corporate assets
Q13-4 Whatever items are used for internal decision-making purposes to measure the
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C13-1 Segment Disclosures [CMA Adapted]
a. The purpose for requiring segment information to be disclosed in financial
statements is to assist financial statement users in analyzing and understanding the
1. Use of existing profit centers.
2. A segment shall be regarded as significant and identified as a reportable
segment if one or more of the following are satisfied:
i.
10% or more of the total revenue is derived from one segment.
ii.
10% or more of the greater in absolute amount of the aggregate profits
or aggregate losses is contributed by the segment.
iii.
10% of the combined assets can be associated with the segment.
3. Management has the ability to define the breakdown of the segments, but the
1. Segment by product line — antihistamines. This single product meets the 10
2. Segment by product group — pharmaceutical, medical instruments, and
group.
3. Disaggregate pharmaceutical into ethical and proprietary drugs and carry
