Your roadmap to accounting guidance in ASC 280

Identification of operating segments

An entity’s first step in applying ASC 280 is to identify its operating segments. It performs such identification by using the management approach described in ASC 280-10-05-3, which is “based on the way that management organizes the segments within the public entity for making operating decisions and assessing performance.” As indicated in ASC 280-10-50-1, "a(n) operating segment is a component of a public entity that has all of the following characteristics:

• It engages in business activities from which it may recognize revenues and incur expenses
• Its operating results are regularly reviewed by the public entity’s chief operating decision-maker to make decisions about resources to be allocated to the segment and assess its performance
• Its discrete financial information is available"

An entity may need to use judgment when evaluating whether a component has all the characteristics of an operating segment.

Reportable segments

Once an entity has identified its operating segments, it determines which of them to report (i.e., its “reportable segments”). The following steps should be considered in the identification of reportable segments:

Continue your segment reporting learning

For a comprehensive discussion of the requirements in ASC 280 related to identifying and disclosing operating segments, see Deloitte’s Roadmap Segment Reporting.

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