3.8 Reconsideration of Quantitative Thresholds
ASC 280-10
50-16 If management judges an
operating segment identified as a reportable segment in the
immediately preceding period to be of continuing
significance, information about that segment shall continue
to be reported separately in the current period even if it
no longer meets the criteria for reportability in paragraph
280-10-50-12.
50-17 If an operating segment
is identified as a reportable segment in the current period
due to the quantitative thresholds, prior-period segment
data presented for comparative purposes shall be restated to
reflect the newly reportable segment as a separate segment
even if that segment did not satisfy the criteria for
reportability in paragraph 280-10-50-12 in the prior period
unless it is impracticable to do so. For purposes of this
Subtopic, information is impracticable to present if the
necessary information is not available and the cost to
develop it would be excessive.
Pending Content (Transition Guidance: ASC
280-10-65-1)
50-17 If an operating segment is
identified as a reportable segment in the current
period due to the quantitative thresholds,
prior-period segment data presented for
comparative purposes shall be recast to reflect
the newly reportable segment as a separate segment
even if that segment did not satisfy the criteria
for reportability in paragraph 280-10-50-12 in the
prior period unless it is impracticable to do so.
For purposes of this Subtopic, information is
impracticable to present if the necessary
information is not available and the cost to
develop it would be excessive.
Changing Lanes
Paragraph BC83 of ASU 2023-07 notes that the FASB “decided to replace the
term restatement with recast throughout Topic 280 to avoid
potential confusion about its meaning in the context of segment reporting.”
The Board indicated that while the term restatement is used in ASC 280 “when
referring to the recasting requirements,” ASC 250 “defines that term as the
process that an entity undergoes to revise its previously issued financial
statements to reflect the correction of an error subsequently identified in
those financial statements.” See Section
7.5 for a discussion of the reporting implications of
retrospective changes in reportable segments.
An entity should generally consider the 10 percent tests in ASC 280-10-50-12
annually (see the next section for interim reassessment considerations). An
operating segment that meets one of the 10 percent tests in the current year should
be presented as a reportable segment, and prior periods should be recast unless
doing so is impracticable. When there has been a change in reportable segments under
the 10 percent tests, an entity will most likely need to reperform the remaining
steps to identify its reportable segments as well as determine whether 75 percent of
revenue has been reported (see Section
3.5).
3.8.1 Interim Reassessment
The identification of reportable segments under ASC 280-10-50-12 is usually
required only for annual reporting periods if an entity’s organizational
structure does not change during the interim period. ASC 280-10-55-16 states, in
part:
[G]enerally, a public entity need not apply the
quantitative tests in each interim period. However, if facts and
circumstances change that would suggest that application of the quantitative
tests in an interim period would reveal a reportable segment that was
previously not reportable, and management expects that the segment will
continue to be of significance, the segment should be disclosed as a new,
separate reportable segment.
See Section 2.10 for guidance that applies when there has been a change in the structure of an entity’s
internal organization during an interim period.
3.8.2 Operating Segment No Longer Meets Quantitative Threshold
An entity is not required to continue to separately disclose an operating
segment that no longer meets the quantitative requirements in the current period
but qualified as a reportable segment in the prior period if the segment is not
considered to be of continuing significance. Prior years’ information should be
restated to conform to the current year’s presentation, with appropriate
disclosure describing the restatement. An operating segment that no longer meets
the quantitative requirements in ASC 280-10-50-12 through 50-14 should continue
to be separately reported if management deems the operating segment to be of
continuing significance to financial statement users. An entity may also want to
continue reporting an operating segment if management expects (e.g., on the
basis of budgets for the coming year) that the operating segment will again meet
the quantitative requirements in the subsequent year. Doing so would provide
comparability and would inform users that the segment is expected to be
significant in the future.
An operating segment that has never met the quantitative requirements may also
be disclosed if management believes that its disclosure would be relevant to
financial statement users.