Asked by Michael Williams on Jul 11, 2024
Verified
Describe the test to determine whether a sufficient number of operating segments are disclosed.
Operating Segments
Components of a business for which separate financial information is available and is evaluated regularly by the chief operating decision-maker to allocate resources and assess performance.
Disclosed
Disclosed means to make known or reveal information that was previously secret or unknown.
- Identify the compulsory disclosures and evaluations for reporting on operating segments as defined by U.S. GAAP.
Verified Answer
DD
Danny DaoudJul 15, 2024
Final Answer :
For operating segments deemed reportable by having passed a 10% threshold test of revenues, operating profit or loss, and assets, the total sales revenues to unaffiliated customers are summed. If this sum is less than 75% of total sales to outsiders, then there is not a sufficient number of operating segments disclosed and there should be additional segment disclosure.
Learning Objectives
- Identify the compulsory disclosures and evaluations for reporting on operating segments as defined by U.S. GAAP.