Interim Reporting and Disclosures about Segments of an Enterprise - Fischer/Taylor/Cheng 10th Edition PDF

Interim Reporting and Disclosures about Segments of an Enterprise FISCHER / TAYLOR / CHENG 10th Edition IMPORTANT NOTICE TO STUDENTS You are hereby prohibited from reproducing, re- publishing, re-broadcasting, re-posting, re- transmitting or transferring in whole or...

Interim Reporting and Disclosures about Segments of an Enterprise FISCHER / TAYLOR / CHENG 10th Edition IMPORTANT NOTICE TO STUDENTS You are hereby prohibited from reproducing, re- publishing, re-broadcasting, re-posting, re- transmitting or transferring in whole or in part any Course Outlines, Course Materials or Lectures which have been provided to you as part of your course of study at The University of the West Indies (The UWI), without the prior permission of The UWI, its authorised agents or copyright holders. 2  LEARNING OBJECTIVE 1 Explain the goal of interim reporting and how the interim period is viewed relative to an annual period COPYRIGHT © 2009 South-Western/Cengage Learning 3  Interim Reporting Provides information on a timely basis Affects the decision-making process Views each interim period as an integral part of the annual period Accounting principles employed for interim purposes are the same as those used for annual purposes with some modification Summarized interim data, rather than complete financial statements, may be presented COPYRIGHT © 2009 South-Western/Cengage Learning 4  LEARNING OBJECTIVE 2 Explain why segmental reporting is important and define an operating segment COPYRIGHT © 2009 South-Western/Cengage Learning 5  Disclosures about Segments of an Enterprise FASB Statement No. 131 – Defines operating segments by emphasizing a ‘‘management approach’’ which focuses on how management organizes information for purposes of making operating decisions and assessing performance – The segments which emerge from an analysis of how management organizes information for decision- making purposes are called operating segments COPYRIGHT © 2009 South-Western/Cengage Learning 6  Disclosures about Segments of an Enterprise Identify operating segments Identify reportable segments – A reasonable number of segments and without being excessive Content of segmental disclosures Enterprise-wide disclosures COPYRIGHT © 2009 South-Western/Cengage Learning 7  Operating Segments Operating segment traits: – A component of an enterprise that earns revenues and incurs expenses – Operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance – Discrete financial information is available COPYRIGHT © 2009 South-Western/Cengage Learning 8  LEARNING OBJECTIVE 3 Apply the criteria used to determine which segment is reportable COPYRIGHT © 2009 South-Western/Cengage Learning 9  Reportable Segments Operating segments which satisfy at least one of the following: Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 percent or more of the combined revenue, internal and external, of all reported operating segments COPYRIGHT © 2009 South-Western/Cengage Learning 10  Reportable Segments Operating segments which satisfy at least one of the following: The absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of (1) the combined profit of all operating segments that did not report a loss or (2) the combined reported loss of all operating segments that did report a loss Its assets are 10 percent or more of the combined assets of all operating segments COPYRIGHT © 2009 South-Western/Cengage Learning 11  Reportable Segments A reasonable number of segments are reported – Aggregate revenue of reportable segments ≥ 75% consolidated revenue Level of detail is not excessive – If the number of reportable segments > 10, consider aggregating certain reportable segments COPYRIGHT © 2009 South-Western/Cengage Learning 12  LEARNING OBJECTIVE 4 Describe the information about a reportable segment that must be disclosed COPYRIGHT © 2009 South-Western/Cengage Learning 13  Content of Segmental Disclosure Information about profit or loss and assets – The measure of profit or loss follows a management approach focusing on internal decision making rather than any strict definition of profit used by the enterprise – Disclose the segment assets evaluated by the CODM – Information presented for reportable segments must be reconciled to the respective consolidated amounts for the enterprise as a whole Specified interim period disclosures COPYRIGHT © 2009 South-Western/Cengage Learning 14  LEARNING OBJECTIVE 5 State which enterprise-wide disclosures must be provided COPYRIGHT © 2009 South-Western/Cengage Learning 15  Enterprise-Wide Disclosures Report revenues from external customers for each product or service or each group of related products or services Report revenues from external customers for the enterprise’s country of domicile and all foreign countries in total Report long-lived assets located in the enterprise’s country of domicile and all foreign countries in total COPYRIGHT © 2009 South-Western/Cengage Learning 16  Disclosures Regarding Major Customers Required to disclose if a single customer represents 10% or more of enterprise revenues Federal, state, local, and foreign governments each should be considered as a single customer For each such customer, disclose the total amount of revenues and the segment(s) revenues are traceable to – Names of major customers need not be disclosed COPYRIGHT © 2009 South-Western/Cengage Learning 17  E12-10 (10th Ed) COPYRIGHT © 2009 South-Western/Cengage Learning 18  E12-10 (10th Ed) Template COPYRIGHT © 2009 South-Western/Cengage Learning 19  E12-12 (10th Ed) COPYRIGHT © 2009 South-Western/Cengage Learning 20  E12-12 (10th Ed) Template COPYRIGHT © 2009 South-Western/Cengage Learning 21  Santas Corp. COPYRIGHT © 2009 South-Western/Cengage Learning 22  Santas Corp. Template COPYRIGHT © 2009 South-Western/Cengage Learning 23