Reportable segments: It is the process of deciding which operating segment is separately reportable and separate supplemental disclosures must be made. It is based on management’s classifications of each operating segment for internal evaluation ofthe financial position and operating performance of the enterprise. The FASB specified three 10 percent significance rules to determine which of the operating segments shall have separately reported information. The separate disclosures are required for segments meeting at least one of the following tests: The segment revenue, including both external sales and intersegment sales, is 10 percent or more. The absolute value of segment’s profit or loss is 10 percent or more. The segment’s assets are 10 percent or more of the total assets of all operating segments. The schedule showing appropriate tests to show countries using a 10 percent materiality threshold.

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Chapter 13, Problem 13.7E

To determine

Reportable segments: It is the process of deciding which operating segment is separately reportable and separate supplemental disclosures must be made. It is based on management’s classifications of each operating segment for internal evaluation ofthe financial position and operating performance of the enterprise.

The FASB specified three 10 percent significance rules to determine which of the operating segments shall have separately reported information. The separate disclosures are required for segments meeting at least one of the following tests:

The segment revenue, including both external sales and intersegment sales, is 10 percent or more.

The absolute value of segment’s profit or loss is 10 percent or more.

The segment’s assets are 10 percent or more of the total assets of all operating segments.

The schedule showing appropriate tests to show countries using a 10 percent materiality threshold.

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