Chapter 1 Section 10: Segment Reporting

Question 1

What are the tests for reportable segments?

Answer 1

10% size test:
Ten percent of revenue (including internal and external)
Ten percent of P/L (if profit, only include profitable segments in total. Same for loss)
Ten percent of assets

75% reporting sufficiency test:
The total revenue of the enterprise must have 75% reported in segments.

Question 2

What if a segment wasn’t reportable last year but is now?

Answer 2

Restate all presented financial statements

Question 3

Formula for segment profit or loss

Answer 3

Revenues
Less directly traceable costs
less reasonably allocable costs
= operating profit/loss