4.5 Reconciliations
ASC 280-10
50-30 A public entity shall
provide reconciliations of all of the following (see Example
3, Case C [paragraphs 280-10-55-49 through 55-50]):
-
The total of the reportable segments’ revenues to the public entity’s consolidated revenues.
-
The total of the reportable segments’ measures of profit or loss to the public entity’s consolidated income before income taxes and discontinued operations. However, if a public entity allocates items such as income taxes to segments, the public entity may choose to reconcile the total of the segments’ measures of profit or loss to consolidated income after those items.
-
The total of the reportable segments’ assets to the public entity’s consolidated assets.
-
The total of the reportable segments’ amounts for every other significant item of information disclosed to the corresponding consolidated amount. For example, a public entity may choose to disclose liabilities for its reportable segments, in which case the public entity would reconcile the total of reportable segments’ liabilities for each segment to the public entity’s consolidated liabilities if the segment liabilities are significant.
Pending Content (Transition Guidance:
ASC 280-10-65-1)
50-30 A public entity shall
provide reconciliations of all of the following
(see Example 3, Cases B and C [paragraphs
280-10-55-48 through 55-50] and Example 4, Case B
[paragraph 280-10-55-55]):
-
The total of the reportable segments’ revenues to the public entity’s consolidated revenues.
-
The total of the reportable segments’ amount for each measure of profit or loss to the public entity’s consolidated income before income taxes and discontinued operations. However, if a public entity allocates items such as income taxes to segments, the public entity may choose to reconcile the total of the segments’ measures of profit or loss to consolidated income after those items.
-
The total of the reportable segments’ assets to the public entity’s consolidated assets.
-
The total of the reportable segments’ amounts for every other significant item of information disclosed to the corresponding consolidated amount (except for the segment disclosures required by paragraphs 280-10-50- 26A through 50-26B). For example, a public entity may choose to disclose liabilities for its reportable segments, in which case the public entity would reconcile the total of reportable segments’ liabilities for each segment to the public entity’s consolidated liabilities if the segment liabilities are significant.
50-31 All significant reconciling items shall be separately identified and described. For example, the amount of
each significant adjustment to reconcile accounting methods used in determining segment profit or loss to the
public entity’s consolidated amounts shall be separately identified and described.
Reconciliations for income statement amounts should be performed for each period
presented. However, as noted in ASC 280-10-50-20, “reconciliations of balance sheet
amounts for reportable segments to consolidated balance sheet amounts are required
only for each year for which a balance sheet is presented.”
Example 4-7
Company G has two reportable segments, A and
B. The CODM regularly reviews EBITDA to assess segment
performance and allocate resources. Company G presents the
reconciliation below of segment EBITDA to profit before
income tax.
Company G should reconcile the subtotal of
segment EBIDTA, $1,200, and not present consolidated EBITDA
after the unallocated corporate expenses because SEC
Regulation S-K, Rule 10(e)(1)(ii)(C), precludes non-GAAP
measures in the financial statements or financial statement
footnotes. Because segment EBITDA is the measure of segment
profit or loss used by the CODM, G should not allocate
depreciation and amortization and interest to Segments A and
B by using a subtotal since this would create another
non-GAAP measure.
Changing Lanes
ASC 280-10-50-30(b), as amended by ASU 2023-07, requires a public entity to
reconcile the “amount for each measure of profit or loss to the public
entity’s consolidated income before income taxes and discontinued
operations.”