4.3 Information About Profit or Loss and Assets for Each Reportable Segment
ASC 280-10
50-22 A public entity shall
report a measure of profit or loss and total assets for each
reportable segment. A public entity also shall disclose all
of the following about each reportable segment if the
specified amounts are included in the measure of segment
profit or loss reviewed by the chief operating decision
maker or are otherwise regularly provided to the chief
operating decision maker, even if not included in that
measure of segment profit or loss (see Example 3, Case B
[paragraph 280-10-55-48]):
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Revenues from external customers
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Revenues from transactions with other operating segments of the same public entity
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Interest revenue
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Interest expense
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Depreciation, depletion, and amortization expense
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Unusual items as described in paragraph 220-20-45-1
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Equity in the net income of investees accounted for by the equity method
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Income tax expense or benefit
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Subparagraph superseded by Accounting Standards Update No. 2015-01
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Significant noncash items other than depreciation, depletion, and amortization expense.
A public entity shall report interest revenue separately from interest expense for each reportable segment
unless a majority of the segment’s revenues are from interest and the chief operating decision maker relies
primarily on net interest revenue to assess the performance of the segment and make decisions about
resources to be allocated to the segment. In that situation, a public entity may report that segment’s interest
revenue net of its interest expense and disclose that it has done so.
50-23 Disclosure of interest revenue and interest expense included in reported segment profit or loss is
intended to provide information about the financing activities of a segment.
50-24 If a segment is primarily a financial operation, interest revenue probably constitutes most of segment
revenues and interest expense will constitute most of the difference between reported segment revenues
and reported segment profit or loss. If the segment has no financial operations or only immaterial financial
operations, no information about interest is required.
An entity must present a measure of profit or loss for each reportable segment.
This measure may vary by reportable segment. See Section 4.4 for further discussion of the
measurement of segment disclosures.
Further, ASC 280-10-50-22 outlines additional amounts that should be disclosed
if they are included in the segment measure of profitability reviewed by the CODM or
are otherwise provided to the CODM. An entity should therefore carefully consider
what kind of information is regularly provided to the CODM. ASC 280-10-55-15 states,
in part:
[T]he segment profit or loss amounts listed in
paragraph 280-10-50-22 are required if they are included in the measure of
segment profit or loss that is used by the chief operating decision maker or if
they are otherwise regularly provided to the chief operating decision maker,
even if not included in that measure. Disclosure of those amounts is required
even though they may not be included in the measure of segment profit or loss or
in the determination of segment assets, as applicable, that is reviewed by the
chief operating decision maker.
Example 4-1
Company A has identified two reportable segments: retail operations and
wholesale operations. The measure of profitability used by
the CODM is EBITDA. In reviewing the monthly reporting
package, the CODM receives information about revenue from
external customers and EBITDA by reportable segment. The
CODM also receives a schedule of intersegment revenue by
reportable segment as well as summaries of depreciation and
amortization expense related to each segment. As a result, A
would disclose revenue from external customers, intersegment
revenue, depreciation and amortization, and EBITDA by
reportable segment. Since the other items listed in ASC
280-10-50-22 are not included in the EBITDA profitability
measure or otherwise regularly provided to the CODM, A would
not be required to disclose them for each reportable
segment.
4.3.1 Interest Revenue and Interest Expense
Generally, interest revenue should be reported separately from interest expense.
The disclosure requirements are intended to elicit some information about the
reportable segment’s financing activities. However, under an exception in ASC
280-10-50-22, net interest revenue may be disclosed when “a majority of the
segment’s revenues are from interest and the chief operating decision maker
relies primarily on net interest revenue to assess the performance of the
segment and make decisions about resources to be allocated to the segment.” In
such instances, the entity should also disclose that interest revenue is
presented net of interest expense. Paragraph 95 of the Background Information and Basis for Conclusions of FASB Statement 131 further clarifies,
stating,
in part:
The Board decided that segments that derive a
majority of revenue from interest should be permitted to disclose net
interest revenue instead of gross interest revenue and gross interest
expense if management finds that amount to be more relevant in managing the
segment. Information about interest is most important if a single segment
comprises a mix of financial and nonfinancial operations. If a segment is
primarily a financial operation, interest revenue probably constitutes most
of segment revenues and interest expense will constitute most of the
difference between reported segment revenues and reported segment profit or
loss. If the segment has no financial operations or only immaterial
financial operations, no information about interest is required.
In addition, an entity should consider interest expense and interest income on
intersegment transactions. ASC 280-10-55-11 states, in part:
For internal reporting purposes, if interest expense is charged to a
segment on advances from another segment and the interest is included in the
measure of performance, the amounts of interest expense and interest income
shall include the amounts charged internally between the segments.
4.3.2 Specific Asset Information for Each Reportable Segment
ASC 280-10
50-25 A public entity shall disclose both of the following about each reportable segment if the specified
amounts are included in the determination of segment assets reviewed by the chief operating decision
maker or are otherwise regularly provided to the chief operating decision maker, even if not included in the
determination of segment assets:
- The amount of investment in equity method investees
- Total expenditures for additions to long-lived assets other than any of the following (see Example 3, Case B [paragraph 280-10-55-48]):
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Financial instruments
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Long-term customer relationships of a financial institution
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Mortgage and other servicing rights
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Deferred policy acquisition costs
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Deferred tax assets.
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50-26 If no asset information is provided for a reportable segment, that fact and the reason therefore shall be
disclosed.
In some situations, the CODM receives no asset information by reportable segment
or receives asset information unrelated to the items listed in ASC 280-10-50-25.
The disclosure requirements for the specific asset information listed in ASC
280-10-50-25 are applicable only when the specified amounts are included in the
segment assets reviewed by the CODM or the CODM receives such information.