2.4 Discrete Financial Information
Another characteristic of an operating segment is the availability of discrete financial information. While
ASC 280 does not define “discrete financial information,” we believe that it generally involves some
measure of a component’s profitability that can be readily distinguished from that of other components
of the organization. For example, if the information provided to the CODM contains revenue and gross
profit by service line, discrete financial information would be available, and there would generally be
enough information to assess performance and make resource allocation decisions by service line.
However, this measure does not need to reflect GAAP-based earnings or all costs that would be
necessary for running the component as a stand-alone business. In many instances, the availability of
gross margin for the component will be sufficient to qualify as discrete financial information. This is
consistent with comments made at the AICPA Conference on Current SEC and PCAOB Developments
in 2015 and 2016 by Division staff members, who noted that the absence of fully allocated costs to a
component does not preclude the component from having discrete financial information.
Further, as discussed in ASC 280-10-55-5, allocation of assets is not necessary
for a component to be considered an operating segment. Thus, discrete financial
information may consist of only limited results of operations information, such as
revenues and gross profit margin, without balance sheet information.
2.4.1 Revenue Information Provided to the CODM
For some entities, the information provided to and regularly reviewed by the CODM will consist of
consolidated operating results and revenue by product or service line or by geography. As discussed
above, revenue alone will generally not be sufficient for a CODM to assess performance and allocate
resources. However, entities should carefully consider all facts and circumstances, including why the
CODM receives disaggregated revenue, how the CODM uses such information, and whether revenue
alone is sufficient for the CODM to allocate resources and assess performance.