3.6 Step 5: Consider Practical Limit of 10 Reportable Segments
ASC 280-10
50-18 There may be a practical
limit to the number of reportable segments that a public
entity separately discloses beyond which segment information
may become overly detailed. Although no precise limit has
been determined, as the number of segments that are
reportable in accordance with paragraphs 280-10-50-12
through 50-17 increases above 10, the public entity should
consider whether a practical limit has been reached.
The guidance acknowledges that there may be a practical limit on the number of reportable segments.
For example, an entity might have identified a large number of operating segments that it has elected
not to aggregate. Once the number of reportable operating segments exceeds a reasonable amount
(e.g., 10), the entity should evaluate the criteria used by management to determine whether aggregation
is appropriate. The fact that the number of operating segments exceeds a practical limit may be an
indication that either the CODM or the operating segments have not been properly identified. See
Chapter 2 for a discussion of the identification of the CODM and operating segments.