What is the minimum amount of assets that each of these segments must own to be considered separately reportable
The minimum amount of assets that each segment must own to be considered separately reportable varies based on the reporting frameworks and standards followed by a particular organization. However, some common guidelines include:
1. Financial Accounting Standards Board (FASB) ASC Topic 280: According to FASB ASC Topic 280, a segment must report its assets separately if its revenue equals or exceeds 10% of the combined revenue of all operating segments, or if its segment assets equal or exceed 10% of the combined assets of all operating segments.
2. International Financial Reporting Standards (IFRS) 8: Under IFRS 8, a segment is considered separately reportable if its revenue equals or exceeds 10% of the combined revenue of all operating segments, or if it meets other quantitative thresholds specified by the organization.
It's important to note that these are general guidelines, and organizations may define additional criteria based on their specific reporting requirements and industry practices. Therefore, it is recommended to refer to the specific reporting standards and guidelines applicable to the organization in question for a more accurate determination of the minimum asset threshold for separate reporting.
To determine the minimum amount of assets that each segment must own to be considered separately reportable, we need to look at relevant accounting standards. It is important to note that the exact criteria for segment reporting can vary depending on the accounting framework being used, such as generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).
Under both GAAP and IFRS, the amount of assets that a segment must own to be considered separately reportable is generally evaluated based on two primary quantitative thresholds: the revenue test and the absolute test. Let's look at each of these tests:
1. Revenue Test: A segment is considered separately reportable if its reported revenue, including both external and intersegment sales, exceeds a certain percentage of the total consolidated revenue of the company. The exact percentage required varies depending on the accounting framework and specific circumstances but is often around 10% or more.
2. Absolute Test: A segment may also be separately reportable if its absolute assets, which include both total assets and investments in equity method investees (if applicable), exceed a specified threshold. Again, the exact threshold can differ based on the accounting framework and specific circumstances.
It is important to consult the specific accounting standards applicable in your jurisdiction and consider any additional criteria or factors that may impact segment reporting.
To determine the minimum amount of assets each segment must own to be considered separately reportable, we need to understand the criteria set by the relevant accounting standards, such as the Financial Accounting Standards Board (FASB) or the International Financial Reporting Standards (IFRS).
Typically, these standards provide guidelines for segment reporting, which is the process of reporting financial information for different segments or business units of a company. These segments are usually identified based on factors such as the nature of the products or services provided, geographical location, or customer type.
While the specific threshold may vary depending on the applicable accounting standards and company policies, a common rule of thumb is that a segment is considered separately reportable if it meets any of the following criteria:
1. Revenue Test: The segment's revenue exceeds a specified percentage of the combined revenue of all segments. For example, if a segment's revenue is 10% or more of the total revenue, it would be considered separately reportable.
2. Asset Test: The segment's assets exceed a specified percentage of the combined assets of all segments. For instance, if a segment's assets are 10% or more of the total assets, it would be considered separately reportable.
3. Profit/Loss Test: The segment's profit or loss exceeds a specified percentage of the combined profits or losses of all segments. For example, if a segment's profit or loss is 10% or more of the total profits or losses, it would be considered separately reportable.
It's important to note that these criteria are not set in stone and can vary depending on the reporting entity, its industry, and applicable regulations. Therefore, it's essential to consult the accounting standards specific to your country and industry to determine the minimum threshold for separately reportable assets in your case.