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.

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 restated 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 deems that its disclosure would be material to financial statement users.

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