1.5 Interaction With Other GAAP

Under ASC 350-20, goodwill is generally tested at the level of the reporting unit, which the ASC master glossary defines as “an operating segment or one level below an operating segment (also known as a component).” Therefore, it is important for entities to clearly distinguish among its reportable segments, operating segments, and reporting units. ASC 280 addresses operating segments and reportable segments, while ASC 350 addresses reporting units.

In determining its reporting units under ASC 350, an entity would begin with the operating segments it identified under ASC 280 and consider disaggregating each operating segment into economically dissimilar components. Likewise, in determining reportable segments under ASC 280, an entity would begin with the operating segments identified under ASC 280 and is permitted to aggregate operating segments that meet certain criteria. The operating segments — or an aggregation of operating segments — that meet certain thresholds in ASC 280 represent reportable segments. See Section 2.6 of Deloitte’s Roadmap Goodwill and Intangible Assets for information about identifying reporting units.

The manner in which an entity determines its operating and reportable segments is further explored in other sections of this Roadmap.

One common disclosure is revenue disaggregated by reportable segment, although such disclosure alone may not satisfy the requirements of ASC 606. The SEC staff has stated that its reviews of filings will include the assessment of other materials, such as investor presentations and earnings releases, to determine whether the appropriate revenue disaggregation is disclosed.