1. Home
  2. Flashcards
  3. Preview

FAR 2_05

  1. True / False: Different accounting principles can be used for segment reporting compared to the accounting principles used for the regular financial statements.
    • False
    • The same principles must be used.
  2. True / False: Segment reporting is only required for public companies. It does not apply to not-for-profit or nonpublic companies.
    True
  3. What is an operating segment (define)
    • A component of an entity that
    • … engages in business activities where it earns revenues and incurs expenses
    • … is regularly reviewed by the entity’s Chief Operating decision maker, and
    • … has discrete financial information (traceable cash flows)
  4. True / False: Corporate headquarters is an operating segment because it has its own expenses.
    • False
    • It must also have its own revenues
  5. True / False: The entity’s pension plan is an operating segment because it has both contributions and expenses.
    • False
    • Post-retirement trusts are not considered operating segments because they don’t earn revenues.
  6. What is the Size Test for determining reportable segments
    • (1) The segment’s revenue, including intersegment sales or transfers is 10% or more of the combined revenues of all segments (including intersegment sales or transfers). OR
    • (2) The segment’s reported profit is >/= 10% of all segments earning a profit OR its reported loss is >/=10% of all segments reporting a loss OR
    • (3) The segment’s identifiable assets are >/= 10% of the combined assets of all segments.
  7. What is the Reporting Sufficiency Test?
    The total consolidated revenues of the selected reportable operating must be >75% of the consolidated revenue of the entity, else more segments must be added.
  8. A segment was deemed reportable in the previous period, but doesn’t meet the criteria for this period. How is this segment presented in the notes or statements?
    If management judges the segment to have continued significance, it can be reported.
  9. A segment that was NOT deemed reportable in the previous period IS deemed reportable in this period. How is this segment presented in the notes or statements?
    The prior periods presented should be restated to reflect the newly reportable segment as a separate segment.
  10. True / False: A reconciliation of the reportable segments’ revenues to the entity’s consolidated revenues must be disclosed in the notes.
    True
  11. True / False: A reconciliation of the reportable segments’ liabilities to the entity’s consolidated liabilities must be disclosed in the notes.
    • Partially True
    • IFRS only
  12. True / False: The identity of a major customer must be disclosed in the notes.
    • False
    • Only the fact that a single customer accounts for 10% or more of the revenue of the entity must be disclosed, not the customer’s identity.
Author
BethM
ID
338310
Card Set
FAR 2_05
Description
Becker Review 2018
Updated

  1. Home
  2. Flashcards
  3. Preview