Chapter 6 — Significant Expenses and Other Segment Items

6.3 Other Segment Items

ASC 280-10

Pending Content (Transition Guidance: ASC 280-10-65-1)

50-26B A public entity shall disclose for each reportable segment an amount for other segment items. The amount for other segment items is the difference between reported segment revenues less the segment expenses disclosed in accordance with paragraph 280-10-50-26A and reported segment profit or loss. A qualitative description of the composition of other segment items also shall be disclosed. Other segment items may include:

The total of a reportable segment’s expenses that are included in the reported measure(s) of a segment’s profit or loss but are not regularly provided to the chief operating decision maker.
The total of a reportable segment’s expenses that are included in the reported measure(s) of a segment’s profit or loss but are not disclosed in accordance with paragraph 280-10-50-26A. A public entity is not precluded from separately disclosing an expense that is not significant for one reportable segment but is significant for another of its segments. However, if a segment expense that is not significant is not separately disclosed, it shall be included as part of other segment items.
The total of a reportable segment’s gains, losses, or other amounts that also are included in each reported measure of a segment’s profit or loss.
The items and amounts required by paragraph 280-10-50-22 when those specified items and amounts are included within the reported measure of segment profit or loss but are not disclosed in accordance with paragraph 280-10-50-26A. For example, a public entity may report net income as the measure of a segment’s profit or loss. In that case, if income tax expense by segment is not regularly provided to the chief operating decision maker, it may be included within other segment items. However, income tax expense is still required to be disclosed in accordance with paragraph 280-10-50-22.

ASU 2023-07 requires disclosure of all other elements that make up an entity’s measure of segment profit or loss but are not considered significant expenses. Entities must disclose such items in a separate category referred to as “other segment items.”

The other segment items amount that must be disclosed is calculated as segment revenue minus separately disclosed significant segment expenses, minus the reported segment profit or loss measure for each reportable segment.

In addition to disclosing the aggregated amount of “other segment items,” entities will need to provide a qualitative disclosure describing the composition of such items, including the nature and type of the other segment items; however, entities are not required to quantify each disaggregated item identified. The qualitative disclosure of other segment items is required even when an entity does not separately report any significant segment expenses.

As discussed in paragraph BC74 of ASU 2023-07, “[t]he Board observed that a public entity should use judgment when describing the composition of other segment items.” Further, paragraph BC72 of the ASU states, in part:

Other segment items may include amounts for the existing segment expense disclosures under paragraph 280-10-50-22, such as depreciation expense, unless those disclosures also are reported under the significant expense principle. That is, the requirements to disclose segment expenses under the significant expense principle and an amount for other segment items may be incremental to the segment information reported in accordance with paragraph 280-10-50-22.

The following are some examples of other segment items:

The total amount of “a reportable segment’s expenses that are included in the reported measure(s) of a segment’s profit or loss but are not regularly provided to the [CODM]” (ASC 280-10-50-26B(a)).
The total amount of a segment’s expenses that are not significant.
The total amount of “a reportable segment’s gains, losses, or other amounts that also are included in each reported measure of a segment’s profit or loss” (ASC 280-10-50-26B(c)) but are not separately disclosed.
Segment expense amounts required under ASC 280-10-50-22 (e.g., interest expense, depreciation, and amortization expense) when such amounts are included in the reported measure of segment profit or loss but are not considered significant segment expenses.

Example 6-4

Company C has identified three operating and reportable segments: Computer Software, Computer Hardware, and Intelligence Solutions. The CODM uses segment EBITDA to assess segment performance and allocate resources.

Intelligence Solutions has no significant segment expenses that are regularly provided to the CODM, and the CODM is only provided with budgeted expenses; no significant expense categories are disclosed separately.
Both Computer Software and Computer Hardware incur cost of revenue. Computer Hardware’s cost of revenue is considered significant and regularly provided to the CODM. However, Computer Software’s cost of revenue is not significant given the nature of the products and services it sells.
Computer Software is the only segment that incurs significant research and development costs and hosting fees.
Depreciation expense is regularly provided to the CODM for Computer Software and Computer Hardware.

Below is an extract of the financial information that is regularly provided to the CODM.

The table below shows the proposed significant expense disclosure for each reportable segment:

See Appendix B for an example illustrating the disclosure requirements of ASU 2023-07 for an entity with more than one reportable segment.

Confidential and Proprietary — for Use Solely by Authorized Personnel

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