How to Determine Reportable Segments

In determining whether a company should report the results of an operating segment, first determine whether any operating segments should be combined (segments that perform the same business activities in the same economic environment should be combined). Second, apply the (1) revenue test, (2) profit or loss test, and (3) asset test. If any one of these three tests is met, the operating segment should be reported. According to the revenue test, a segment should be reported if the segment's revenues are at least 10% of revenues from all segments combined. According to the profit or loss test, a segment should be reported if the absolute value of its profit or loss is at least 10% of the larger of (a) the combined profit of all profitable segments and (b) the combined losses of all segments that posted a loss. According to the asset test, the segment should be reported if the segment's assets are at least 10% of the combined assets of all segments. The results of any unreported segments should be reported in an "All Other" category. If the combined revenues of all reportable segments do not comprise at least 75% of the company's sales to external customers, then the company should report additional segments until this threshold is met. — Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES AND SPREADSHEETS http://eepurl.com/dIaa5z — SUPPORT EDSPIRA ON PATREON *  / prof_mclaughlin   — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT https://edspira.thinkific.com — LISTEN TO THE SCHEME PODCAST Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/4WaNTqV... Website: https://www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK   / prof_mclaughlin   — ACCESS INDEX OF VIDEOS https://www.edspira.com/index — CONNECT WITH EDSPIRA Facebook:   / edspira   Instagram:   / edspiradotcom   LinkedIn:   / edspira   — CONNECT WITH MICHAEL Twitter:   / prof_mclaughlin   LinkedIn:   / prof-michael-mclaughlin   — ABOUT EDSPIRA AND ITS CREATOR https://www.edspira.com/about/ https://michaelmclaughlin.com