Segment Reporting – SEC Reporting – Accounting and Finance


Company's controller needs to test the various sections to determine which ones qualify as being reportable. He collects the following information: Reportable threshold (10%) $51,100 $5,000 $114,900 Maglev automobiles The following two items must also be reported if they are contained in the determination of segment assets, or are routinely provided to the chief operating decision maker: Segment Disclosure Maglev cars 29,000 -- -21,000 90,000 Income tax expense or income Assets Consolidated resources to reportable segment assets When an operating segment only has minimal financial operations, it is not required to record any information regarding interest income or interest expense.

Material expense items Extraordinary Products This segment contains the disclosures for a variety of aspects of segment reporting that are required under GAAP. At the conclusion of every set of prerequisites is a sample disclosure containing the more common elements of the coverage requirements. Profit or loss Total consolidated income before income taxes, extraordinary items, and Other material non-cash Products Revenues Total company revenues to reportable segment revenues Total $467,000 Suggestion: The variety of methods available for section testing makes it possible that there will be quite a high number of reportable segments.

If this is so, it can be burdensome to create a report for so many segments, and it may be confusing for the viewers of the company's financial statements. Consequently, consider restricting the number of reportable segments to ten; a company can aggregate the data for additional sections for reporting purposes. When an operating segment qualifies for the very first time as being reportable, additionally report the usual section information for it in any prior period segment data that may be introduced for comparison purposes, even if the section wasn't reportable in the previous period.

An exemption is allowed for this prior period reporting when the necessary information isn't accessible, or whether it would be too costly to accumulate the info. Revenues from external customers The entire cost for additions to fixed assets. Expenditures for many other long-term assets are excluded from this requirement. Diesel locomotives X X X 120,000 The foundation of organization (such as by geographical region or product line) $511,000 $50,000 -$36,000 $1,149,000 discontinued operations to reportable segment profit or loss Segment Disclosure This analysis proves that the diesel locomotive, electric locomotive, passenger car, and trolley car sections are reportable, and that the combined earnings of those reportable segments easily exceeds the 75% coverage threshold.

As a result, the company does not need to individually report information for any extra segments. Depreciation, depletion, and amortization expense Other items Consolidated amounts to reportable segment levels for every other significant (000s) (000s) (000s) (000s) The operating segment information reported must be the exact same information reported to the chief operating decision maker for purposes of assessing segment performance and allocating resources.

This may result in a gap between the information reported at the segment level and in the public entity's consolidated financial consequences. If so, disclose the gaps between the two figures.

This might include a discussion of any policies to the allocation of costs which have been professionally incurred, or the allocation of jointly-used assets. Electric locomotives X X X 85,000 Item of disclosed segment information Diesel locomotives $120,000 $10,000 $-- $320,000 Segment Reporting Revenue Profit Loss Assets The vital requirement of section reporting is that the revenue, gain or loss, and resources of each section be individually reported for any period for which an income statement is presented.

Additionally, reconcile this segment information back to the organization's mixed results, which requires the addition of any adjusting items. Additionally disclose the methods where the thing decided which sections to report. The essential information to add in a section report comprises: Interest income Passenger cars 200,000 32,000 500,000 In the table, the entire benefit surpasses the entire reduction, so the controller uses the entire gain for the 10% profit test.

The controller then lists the same table , but now with all the losses column removed and with test thresholds on top of the table that are utilized to ascertain which sections are reported. An"X" mark below a test threshold indicates that a section is reportable.

Additionally, the controller adds a new column on the right side of the desk, which can be utilized to figure the entire revenue for the reportable segments. Toy trains Profit or loss EXAMPLE Trolley cars 62,000 -- -11,000 55,000 Revenues from inter-company trades Passenger cars X X X 200,000 Equity method interests in other entities.

Interest expense The Kinds of Services and Products sold by each section Category Reconciliation Trolley automobiles X 62,000 The preceding disclosures should be presented along with These reconciliations, which should be individually identified and described: