beams11 ppt15 Modified 1 
Chapter 15
Segment Reporting
to accompany
Advanced Accounting, 11th edition by Beams, Anthony, Bettinghaus, and Smith
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-1
Segment Reporting
Segment reporting under GAAP applies to public companies, i.e., those listed companies that file with the SEC or are presenting financial statements prior to listing in a public market.
Information must be reported for the major units
(segments) in which management structured the company for internal decision making and performance evaluation purposes.
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-2
Segment Reporting: Objectives
1. Understand how the management approach is used to identify potentially reportable operating segments.
2. Apply the threshold tests to identify reportable operating segments: the revenue test, the asset test, and the operating profit test. 3. Apply the 75% external revenue test to determine whether additional segments must be reported
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
11-3
Segment Reporting: Objectives (cont.)
4. Understand the types of information that may be disclosed for segments and the reasons that the levels of disclosure may vary across companies.
5. Understand what segment disclosures are reconciled to the consolidated amounts.
6. Know the types of enterprise-wide disclosures related to products and services, geographic areas of operation, and major customers that are required to be disclosed.
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-4
Segment Financial Reporting
1: REPORTABLE OPERATING
SEGMENTS
ASC 280-10-05 TO 55
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-5
Operating Segments
According to GAAP, companies that have publicly traded debt or equity instruments must report on their business segments.
Reporting is based on the structure used by management to make decisions or evaluate
Segment Reporting
to accompany
Advanced Accounting, 11th edition by Beams, Anthony, Bettinghaus, and Smith
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-1
Segment Reporting
Segment reporting under GAAP applies to public companies, i.e., those listed companies that file with the SEC or are presenting financial statements prior to listing in a public market.
Information must be reported for the major units
(segments) in which management structured the company for internal decision making and performance evaluation purposes.
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-2
Segment Reporting: Objectives
1. Understand how the management approach is used to identify potentially reportable operating segments.
2. Apply the threshold tests to identify reportable operating segments: the revenue test, the asset test, and the operating profit test. 3. Apply the 75% external revenue test to determine whether additional segments must be reported
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
11-3
Segment Reporting: Objectives (cont.)
4. Understand the types of information that may be disclosed for segments and the reasons that the levels of disclosure may vary across companies.
5. Understand what segment disclosures are reconciled to the consolidated amounts.
6. Know the types of enterprise-wide disclosures related to products and services, geographic areas of operation, and major customers that are required to be disclosed.
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-4
Segment Financial Reporting
1: REPORTABLE OPERATING
SEGMENTS
ASC 280-10-05 TO 55
Copyright ©2012 Pearson Education,
Inc. Publishing as Prentice Hall
15-5
Operating Segments
According to GAAP, companies that have publicly traded debt or equity instruments must report on their business segments.
Reporting is based on the structure used by management to make decisions or evaluate