Operating Segments

What is the main purpose of segment reporting, as described in the passage?

• To enable investors and users to make better assessments of each business activity.

• To enable investors and users to understand the performance of the entity as a whole.

• Both answers are correct

• None of the choices

The "management approach" used in identifying operating segments means that the operating segments are identified based on:

• The internal organizational structure of the entity

• The external industry classification of the entity

• The internal reports reviewed by the chief operating decision maker

• The external financial reporting requirements

   

An entity shall report information about an operating segment that meets which of the following quantitative thresholds?

• The segment revenue is 5% or more of the combined revenue

• The absolute amount of profit or loss is 5% or more of the combined profit/loss

• The assets of the segment are 5% or more of the combined assets

• The segment revenue, profit/loss, and assets are each 10% or more of the combined amounts

If the total external revenue of reportable operating segments constitutes less than what percentage of the entity's external revenue, additional operating segments shall be identified as reportable segments?

• 50%

• 65%

• 75%

• 90%

Two or more operating segments may be aggregated into a "single operating segment" if the segments:

• Have dissimilar economic characteristics

• Share a majority of the five aggregation criteria

• Have significantly different revenue and expenses

• Are of similar size in terms of revenue and assets

Which of the following information is not required to be disclosed for each reportable operating segment?

• General information about the operating segment

• Information about profit or loss, including specified revenue and expenses

• Information about segment assets and segment liabilities

• The basis of measurement for the segment information

The five aggregation criteria that operating segments must share a majority of in order to be aggregated into a "single operating segment" include all of the following EXCEPT:

• Nature of product or service

• Type or class of customers

• Marketing method or distribution method

• The entity's organizational structure

Which of the following is not one of the required disclosures for each reportable operating segment?

• Reconciliations of the totals of segment revenue, segment profit or loss, segment assets, and segment liabilities to the corresponding items in the entity's financial statements

• Detailed information about the chief operating decision maker's process for allocating resources and assessing performance

• Information about profit or loss, including specified revenue and expenses included in the measure of profit or loss

• Information about segment assets and segment liabilities and the basis of measurement

An entity has four operating segments, and the total external revenue of the reportable segments constitutes 70% of the entity's external revenue. To meet the "75% of entity external revenue" threshold, the entity must:

• Identify one additional operating segment as reportable

• Aggregate two of the existing operating segments

• Disclose more detailed information about the four existing reportable segments

• No further action is required, as the 75% threshold has not been met

   

Which of the following is not a criterion for aggregating two or more operating segments into a "single operating segment"?

• Nature of the production process

• Type or class of customers

• Geographical location of the segments

• Marketing method or distribution method