# ASC 280-10-55: Segment Reporting — Overall — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

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## ASC 280-10-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/280/10/#55-implementation-guidance-and-illustrations)

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##### [280-10-55-1](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-1)

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This Implementation Guidance and Illustrations Section, which is an integral part of the requirements of this Subtopic, provides general guidance to assist users in the preparation of segment disclosures to be included in general-purpose financial statements of public entities. The Examples provide illustrations of the required disclosures and the determination of reportable segments.

#### Implementation Guidance

##### [280-10-55-2](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-2)

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An equity method investee could be considered an [operating segment](https://asc.understandingaccounting.org/glossary/o/#operating-segment "A component of a public entity. See Section 280-10-50 for additional guidance on the definition of an operating segment."), if, under the specific facts and circumstances being considered, it meets the definition in paragraphs [280-10-50-1](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-1) and [280-10-50-3](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-3). An investee accounted for by the equity method could be considered an operating segment even though the investor has no control over the performance of the investee. Paragraph [280-10-50-1(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-1) provides that an operating segment is one whose 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. Management may regularly review the operating results and performance of an equity method investee for purposes of evaluating whether to retain the investor-investee relationship. This Subtopic does not require that the chief operating decision maker be responsible for making decisions about resources to be allocated within the segment. That is, this Subtopic does not require that the chief operating decision maker be responsible for making decisions at the investee operating level that affect its operations and performance. Therefore, control over the investee is not a criterion for the investee to be considered an operating segment. For information relating to equity method investees, see Topic 323.

##### [280-10-55-3](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-3)

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A corporate division that recognizes revenues (for example, a treasury operation that recognizes interest income) and incurs expenses could be considered an operating segment, if, under the specific facts and circumstances being considered, it meets the definition in paragraph [280-10-50-1](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-1). Some believe that corporate divisions could not be considered operating segments because paragraph [280-10-50-4](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-4) indicates that not every part of a [public entity](https://asc.understandingaccounting.org/glossary/p/#public-entity "A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market.") is necessarily an operating segment or part of an operating segment, for example, a corporate headquarters or certain functional departments that do not recognize revenues or that recognize revenues that are only incidental to the activities of the public entity.

##### [280-10-55-4](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-4)

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However, a corporate division that recognizes revenues and that has available discrete financial information and whose operating results are reviewed regularly by the chief operating decision maker should be considered an operating segment. Even if the revenues are considered incidental, this Subtopic does not preclude such a division from being a reportable segment if management believes the additional information may contribute to a better understanding of the public entity.

##### [280-10-55-5](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-5)

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A division that recognizes revenues and incurs expenses but does not have any assets associated with it for internal reporting purposes could be considered an operating segment, if, under the specific facts and circumstances being considered, it otherwise meets the definition in paragraph [280-10-50-1](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-1). For example, assume Division A of a public entity conducts business with a separate class of customer using assets shared with Division B and Division B allocates expenses associated with those shared assets to Division A, but the assets, themselves, are presented in the internal financial reports of Division B. A public entity may allocate an expense to a segment without allocating the related asset; however, disclosure of that fact is required. Therefore, allocation of assets is not a criterion for the component to be considered an operating segment.

##### [280-10-55-6](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-6)

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Paragraph [280-10-50-26](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26) explains that, if no asset information is provided for a reportable segment, that fact and the reason therefore shall be disclosed.

##### [280-10-55-7](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-7)

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If a reportable segment meets the conditions in paragraphs

[205-20-45-1A through 45-1G](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A)

to be reported in discontinued operations, an entity is not required to also disclose the information required by this Subtopic. Paragraph [280-10-55-19](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-19) addresses whether there is a need to recast previously reported information if there is a disposal of a component that was previously disclosed as a reportable segment.

##### [280-10-55-7A](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-7A)

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Paragraph [280-10-50-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-11) states that operating segments are considered to be similar if they can be expected to have essentially the same future prospects. Therefore, the similarity of the economic characteristics should be evaluated based on future prospects and not necessarily on the current indicators only. In other words, if the segments do not currently have similar gross margins and sales trends but the economic characteristics and the other five criteria are met and the segments are expected to again have similar long-term average gross margins and sales trends, the two segments may be aggregated.

##### [280-10-55-7B](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-7B)

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Likewise, if segments generally do not have similar economic characteristics, but in the current year have similar gross margins or sales trends and it is not expected that the similar gross margins or sales trends will continue in the future, it should not be presumed that the segments should be aggregated for the current-year segment disclosures just because current economic measures are similar.

##### [280-10-55-7C](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-7C)

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Aggregation of segments should be consistent with the objective and basic principles of this Subtopic—to provide information about the different types of business activities in which a public entity engages and the different economic environments in which it operates in order to help users of financial statements better understand the public entity's performance, better assess its prospects for future net cash flows, and make more informed judgments about the public entity as a whole. This Subtopic mentions that segments having similar economic characteristics would be expected to have similar long-term average gross margins. That measure is used, only as an example, because gross margin is a measure of profitability that is less likely to be affected by allocations. Evaluating similar economic characteristics is a matter of judgment that depends on specific facts and circumstances.

##### [280-10-55-8](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-8)

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In measuring the performance of its equity investees, proportionate consolidation shall be used for reporting segment information if that is the way in which such information is reviewed by the chief operating decision maker. This Subtopic specifies that the amount of each segment item reported shall be the measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segment and assessing its performance. If proportionate consolidation is used for segment reporting, this Subtopic also requires disclosure of the accounting policy followed for segment reporting (see paragraph [280-10-50-29(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29)), the elimination of the investee's revenues and assets in reconciling to consolidated results (see paragraphs

[280-10-50-30 through 50-31](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-30)

), and the investment in and equity income from the investee (see paragraphs [280-10-50-22(g)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) and [280-10-50-25(a)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-25)). Even though the proportionate consolidation method may be used for internal reporting purposes (and thus for external reporting of segment information), that method is not permitted for purposes of preparing general-purpose financial statements in accordance with generally accepted accounting principles (GAAP) except where it is established industry practice (for example, in some oil and gas venture accounting).

##### [280-10-55-9](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-9)

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[Paragraph superseded by Accounting Standards Update No. 2023-07](https://asc.understandingaccounting.org/updates/asu-2023-07/).

##### [280-10-55-10](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-10)

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[Paragraph superseded by Accounting Standards Update No. 2023-07](https://asc.understandingaccounting.org/updates/asu-2023-07/).

##### [280-10-55-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-11)

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For internal reporting purposes, if interest expense is charged to a segment on advances from another segment and the interest is included in the measure of performance, the amounts of interest expense and interest income shall include the amounts charged internally between the segments. Paragraph [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) requires disclosure of segment interest if it is included in the measure of segment profit or loss that is reviewed by the chief operating decision maker and, because the internal measure used by the chief operating decision makers includes intra-entity interest, that interest would be part of the measure reported. In addition, paragraph [280-10-50-27](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-27) discusses items that are included in segment amounts reported to the chief operating decision maker and therefore included in the segment reported amounts. Under the management approach, the amounts used by management are the amounts that are required to be disclosed; adjusting those amounts for any reason is not permitted. Paragraph [280-10-50-29(a)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29) also requires disclosure of the basis of accounting for transactions between reportable segments.

##### [280-10-55-12](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-12)

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The chief operating decision maker may evaluate the performance of its segments based on earnings before interest, taxes, depreciation, and amortization. Included in the management reports reviewed by the chief operating decision maker are summaries of depreciation and amortization expense related to each of the segments.

##### [280-10-55-13](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-13)

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Since the reports include depreciation and amortization expense these amounts are required to be disclosed for each reportable segment even though the chief operating decision maker does not include these amounts in evaluating performance of the segment. Paragraph [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) requires that a public entity report a measure of profit or loss for each reportable segment. Paragraph [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) requires disclosure of certain other amounts about each reportable segment if the specified amounts are included in the measure of segment profit or loss reviewed by the chief operating decision maker. Although, in this case, depreciation and amortization expense is not included in the measure of segment profit or loss that is reviewed by the chief operating decision maker, such amounts are provided to the chief operating decision maker by segment. It is, therefore, assumed that the chief operating decision maker uses this information in evaluating the performance of the public entity's segments and, accordingly, disclosure of depreciation and amortization expense by each reportable segment would be required. This conclusion is based on paragraph [280-10-50-27](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-27). This conclusion does not change the requirement that, in this example, the measure of segment profit or loss to be disclosed for each reportable segment be based on the segment earnings before interest, taxes, depreciation, and amortization data that are used by the chief operating decision maker.

##### [280-10-55-14](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-14)

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Note that this case deals specifically with earnings before interest, taxes, depreciation, and amortization as the measure of segment profit or loss and depreciation and amortization expense as the information that is excluded from earnings before interest, taxes, depreciation, and amortization but otherwise provided to the chief operating decision maker for purposes of evaluating segment performance. However, this example is applicable to any similar situation. That is, if the amounts of the items required by paragraphs [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) and [280-10-50-25](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-25) are included by segment in reports that are regularly provided to the chief operating decision maker, even though they are not included in the measure of segment profit or loss or in the determination of segment assets, as applicable, that is reviewed by the chief operating decision maker, then disclosure of those amounts is required.

##### [280-10-55-15](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15)

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In other words, the segment profit or loss amounts listed in paragraph [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) are required if they are included in the measure of segment profit or loss that is used by the chief operating decision maker or if they are otherwise regularly provided to the chief operating decision maker, even if not included in that measure. Disclosure of those amounts is required even though they may not be included in the measure of segment profit or loss or in the determination of segment assets, as applicable, that is reviewed by the chief operating decision maker.

##### [280-10-55-15A](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15A)

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The information that is regularly provided to the chief operating decision maker may include segment expense information that is expressed in a form other than actual amounts, for example, as a ratio or an expense as a percentage of revenue. The requirements in paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A) apply to expense amounts that can be easily computed from the information that is regularly provided to the chief operating decision maker.

##### [280-10-55-15B](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15B)

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For example, if the information that is regularly provided to the chief operating decision maker includes a segment revenue amount and a segment gross margin amount, segment cost of sales can be easily computed from this information. Therefore, if cost of sales is significant, an entity should disclose the category and amount in accordance with paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A). As another example, the information that is regularly provided to the chief operating decision maker may include a segment revenue amount and segment warranty expense expressed as a percentage of segment revenue. In this example, segment warranty expense can be easily computed from this information. Therefore, if warranty expense is significant, the entity should disclose the category and amount in accordance with paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A).

##### [280-10-55-15C](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15C)

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If the information regularly provided to the chief operating decision maker contains a category and amount for allocated corporate overhead expenses by segment that is included in reported segment profit or loss, a public entity should assess that category and amount for disclosure in accordance with paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A). For example, an entity would disclose allocated corporate overhead if it is a significant segment expense in accordance with paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A).

##### [280-10-55-15D](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15D)

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All public entities, including those public entities that have a single reportable segment, are subject to the requirements of this Topic in its entirety. Paragraph [280-10-50-1(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-1) states that a characteristic of an operating segment is that it is a component of an entity whose 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. Paragraph [280-10-50-4](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-4) states that not every part of a public entity is necessarily an operating segment or part of an operating segment; for example, corporate headquarters or certain functional departments may not be part of an operating segment. The entity should evaluate the guidance in paragraph [280-10-50-4](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-4) and the definition of an operating segment when identifying its operating segment (or segments) and determining whether that operating segment (or segments) constitutes all or part of the consolidated entity. For example, when a public entity has a single operating segment that constitutes part, but not all, of the consolidated entity, the chief operating decision maker may regularly review the operating results and performance of the operating segment differently than how management assesses the performance of the consolidated entity. Alternatively, when the single operating segment constitutes all of the consolidated entity, the chief operating decision maker may regularly review the entity-wide operating results and performance.

##### [280-10-55-15E](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15E)

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A public entity that discloses a single reportable segment should identify the measure or measures (in accordance with paragraph [280-10-50-28A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-28A)) of a segment’s profit or loss that the chief operating decision maker uses in assessing segment performance and deciding how to allocate resources, which may include a profit or loss measure that is not presented on the public entity’s consolidated income statement. For example, the chief operating decision maker of a single reportable segment entity may use both net income and earnings before interest, taxes, depreciation, and amortization as the measures of profit or loss for purposes of assessing segment performance and deciding how to allocate resources. However, earnings before interest, taxes, depreciation, and amortization is not presented on the public entity’s consolidated income statement.

##### [280-10-55-15F](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15F)

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When the chief operating decision maker of a single reportable segment entity uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, at least one of the reported segment profit or loss measures should be that which management believes is determined in accordance with the measurement principles most consistent with those used in measuring the corresponding amounts in a public entity’s consolidated financial statements and reconciled in accordance with paragraphs [280-10-50-30(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-30) and [280-10-50-32(f)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-32). A single reportable segment entity also may report additional performance measures that are used by the chief operating decision maker in assessing segment performance and deciding how to allocate resources in accordance with paragraphs

[280-10-50-28A through 50-28B](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-28A)

.

##### [280-10-55-15G](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-15G)

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The chief operating decision maker may be regularly provided with segment expense categories and amounts for one segment and no segment expense categories and amounts for another segment. Alternatively, the chief operating decision maker may not be regularly provided with expense information for any of a public entity’s segments. Paragraphs

[280-10-50-26A through 50-26C](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A)

apply to each reportable segment. When no significant expense categories and amounts are disclosed for a reportable segment, a public entity should report an amount and a description of the composition of other segment items in accordance with paragraph [280-10-50-26B](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26B) and describe the expense information that the chief operating decision maker uses to manage the operations of that segment in accordance with paragraph [280-10-50-26C](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26C). For example, when no significant expenses are disclosed for a reportable segment, the public entity may disclose that the chief operating decision maker is regularly provided with only budgeted or forecasted expense information for that segment or uses consolidated expense information. The explanation of the expense information that the chief operating decision maker uses to manage operations is not required when significant expense categories and amounts are disclosed for a reportable segment.

##### [280-10-55-16](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-16)

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Interim information is intended to be an update of the information that was presented in the most recent annual financial statements. Therefore, in the absence of a change in the structure of a public entity's internal organization during an interim period that would cause the composition of its reportable segments to change, generally, a public entity need not apply the quantitative tests in each interim period. However, if facts and circumstances change that would suggest that application of the quantitative tests in an interim period would reveal a reportable segment that was previously not reportable, and management expects that the segment will continue to be of significance, the segment should be disclosed as a new, separate reportable segment. This conclusion is consistent with the basic principle of interim financial reporting in paragraph [270-10-45-2](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-2).

##### [280-10-55-17](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-17)

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Recasting of prior-period information to conform to current-period presentation is required (if practicable) when there has been a change in the composition of the segments resulting from changes in the structure of an entity's internal organization or when there has been a change in the segment expense information that is regularly provided to the chief operating decision maker in a manner that causes the identification of significant segment expenses to change. However, recasting of prior-period segment information for a change in measurement methods used to determine reported segment profit or loss is not required by this Subtopic.

##### [280-10-55-17A](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-17A)

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A public entity may change the segment information that is regularly provided to the chief operating decision maker in a manner that causes the identification of segment expense categories to change when applying paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A). For example, in the current period, the information regularly provided to the chief operating decision maker is changed to specify an amount for research and development expense by segment that is included in reported segment profit or loss. That information was not regularly provided to the chief operating decision maker in prior periods. Research and development expense by segment should be disclosed in the current period in accordance with paragraph [280-10-50-26A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A), if significant. The public entity also is required to recast the prior-period segment expense information to conform to current-period presentation unless it is impracticable to do so. If it is impracticable to do so, the public entity should disclose the information described in paragraph [280-10-50-35](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-35).

##### [280-10-55-18](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-18)

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Paragraph [280-10-50-36](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-36) explains that although recasting is not required to reflect a change in measurement of segment profit or loss, it would be preferable to show all segment information on a comparable basis to the extent it is practicable to do so. If prior-period information is not recast, paragraph [280-10-50-29(d)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29) nonetheless requires disclosure of the nature of any changes from prior periods in the measurement methods used to determine reported segment profit or loss, including significant changes from prior periods to the measurement methods of expenses, the method for allocating expenses to a segment, or changes in the methods for allocating centrally incurred expenses, and the effect, if any, of those changes on the measure of segment profit or loss.

##### [280-10-55-19](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-19)

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Segment information for prior periods for disposal of a component that was previously disclosed as a reportable segment is not required to be recast. However, if the income statement and balance sheet information for the discontinued component have been reclassified in comparative financial statements, the segment information for the discontinued component need not be provided for those periods. Paragraph [280-10-55-7](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-7) addresses disclosure requirements if a component of a public entity that is reported as a discontinued operation is a reportable segment.

##### [280-10-55-20](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-20)

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Paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41) provides requirements for entity-wide disclosure of certain information by geographic areas. If revenues attributed to or assets located in an individual foreign country are material, such amounts are required to be disclosed.

##### [280-10-55-21](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-21)

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Unlike other provisions of this Subtopic, in which segment information is disclosed on a management approach basis and, therefore, disclosure of certain items is not required if such amounts are not reviewed by or not included in measures that are reviewed by the chief operating decision maker, supplemental geographic disclosures should be disclosed in accordance with paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41).

##### [280-10-55-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-22)

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Paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41) requires disclosure of revenues from external customers attributed to all foreign countries in total from which the public entity derives revenues and separate disclosure of revenues from external customers attributed to an individual foreign country if material. In determining the revenues attributed to foreign countries, a public entity may allocate revenues from external customers to geographic areas in whatever way it chooses (for example, by selling location, customer location, or the location to which the product is transported, which may differ from the location of the customer), as long as that method is reasonable, consistently applied, and disclosed.

##### [280-10-55-23](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-23)

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This Subtopic does not define what is intended to be included in long-lived assets. In addition, the provisions of this Subtopic allow for flexibility and judgment by the preparer. However, the purpose of the entity-wide disclosures is to provide information about risks and uncertainties in certain geographic areas. One of the reasons for requiring disclosure of long-lived assets in geographic areas as opposed to total assets is that long-lived assets are potentially at greater risk because they are difficult to move and are relatively illiquid. _Long-lived assets_, as that phrase is used in paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41), implies hard assets that cannot be readily removed, which would exclude intangibles.

##### [280-10-55-24](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-24)

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The geographic information specified by paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41) is required, if material, by country. That paragraph also states, however, that a public entity may always provide, in addition to the information required by this paragraph, subtotals of geographic information about groups of countries, for example, the European Monetary Union.

##### [280-10-55-25](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-25)

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With regard to reporting geographic information as discussed in paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41), the degree of interrelationship between the United States and Puerto Rico (as well as non-self-governing U.S. territories such as the Virgin Islands and American Samoa) is such that Puerto Rican operations of U.S. public entities shall be considered domestic operations. Factors such as proximity, economic affinity, and similarities in business environments also indicate this classification for the Puerto Rican operations of U.S. public entities. It should be noted that this Subtopic does not prohibit additional disclosures about Puerto Rican operations that might be useful in analyzing and understanding an entity's financial statements.

#### Illustrations

##### [280-10-55-26](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-26)

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The following diagram illustrates how to apply the main provisions for identifying reportable operating segments as defined in this Subtopic. The diagram is a visual supplement to the written standards section. It should not be interpreted to alter any requirements of this Subtopic nor should it be considered a substitute for the requirements.

![](https://asc.understandingaccounting.org/asc-img/GUID-55BB2E10-25A2-42EB-8AC1-C1925CE16AED-low.gif)

##### [280-10-55-27](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-27)

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Assume that an entity is organized as follows.

![](https://asc.understandingaccounting.org/asc-img/GUID-D802BCBD-FBAD-4545-8450-38B2CADA8C6C-low.gif)

##### [280-10-55-28](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-28)

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This Example discusses the determination of reportable segments (see paragraph [280-10-50-10](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-10)) by a public entity when one of its subsidiaries is itself a public entity and includes segment information in its separate financial statements.

##### [280-10-55-29](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-29)

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Subsidiary C is itself a public entity because it has public debt outstanding. The segment information for the separate financial statements of Subsidiary C discloses three reportable segments (Dept. Y, Dept. Z, and Division 7).

##### [280-10-55-30](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-30)

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In this situation it should not be automatically assumed that the reportable segments of Subsidiary C are also reportable segments within the consolidated financial statements of Public Company. Determining the number of operating segments of a public entity depends on the specific facts and circumstances and should be separately evaluated for each public entity that is required to apply this Subtopic.

##### [280-10-55-31](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-31)

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Assume that an entity has identified six operating segments prior to applying the aggregation criteria. Segments B and D have been identified as reportable segments based on the 10 percent threshold criteria in paragraph [280-10-50-12](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-12). The revenue from external customers (there are no intersegment transactions) for each of the six segments is as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-FDAA960D-9A85-4E6A-8919-873F6C741383-low.gif)
    
    Revenue Segment A $6 Segment B 38 Segment C 4 Segment D 35 Segment E 9 Segment F 8 Consolidated external revenues $100

##### [280-10-55-32](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-32)

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The following Cases illustrate the application of the aggregation (Cases A and B) and quantitative threshold (Cases C, D, and E) criteria for identifying reportable segments.

##### [280-10-55-33](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-33)

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Segment E is below the 10 percent threshold while Segment D is above the 10 percent threshold. Assume that only a majority of the aggregation criteria is met.

##### [280-10-55-34](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-34)

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The aggregation criteria in paragraph [280-10-50-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-11) (which requires all of the specified criteria to be met) permit aggregation of identified operating segments prior to an evaluation of the significance of the identified operating segments to determine which are reportable. In other words, segments are first identified, then identified segments may be aggregated, if management so chooses, and if the aggregation criteria in that paragraph are met (at this stage all of the specified criteria must be met to be able to aggregate the identified operating segments). Next, an evaluation of the significance of the identified operating segments is performed to determine which are reportable. An operating segment is considered reportable if it meets any one of the threshold criteria. After reportable segments are identified based on the threshold criteria, paragraph [280-10-50-13](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-13) permits a public entity to aggregate segments that do not meet the quantitative thresholds (at this stage only a majority of the specified criteria must be met). Therefore, if an operating segment is not a reportable segment because it does not meet any of the 10 percent threshold criteria in paragraph [280-10-50-12](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-12) and does not meet all of the aggregation criteria in paragraph [280-10-50-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-11) with another segment that does meet at least one of the 10 percent threshold criteria, it can only be aggregated with segments that do not meet the 10 percent threshold criteria if a majority of the aggregation criteria are met. In this Case, when only a majority of the criteria is met, Segment E could be aggregated with one or more of Segments A, C, or F but could not be aggregated with Segments B or D. When all of the criteria are met, any segments may be aggregated.

##### [280-10-55-35](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-35)

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Assume that Segments A and B meet all of the five criteria for aggregation and have similar economic characteristics; however, this year certain economic performance measures differ. For example, gross margins differ slightly and sales of the segments, which typically move in tandem, trended slightly differently the current year. Those differences were due to inventory problems caused by the entity's suppliers, and it is expected that the margins and sales trends of Segments A and B will again be similar next year.

##### [280-10-55-36](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-36)

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Even though economic performance measures differ, under this fact pattern Segment A may be aggregated with Segment B for current-year segment disclosures. Paragraph [280-10-50-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-11) states that operating segments are considered to be similar if they can be expected to have essentially the same future prospects. Paragraph [280-10-55-7A](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-7A) explains that the similarity of the economic characteristics should be evaluated based on future prospects and not necessarily on the current indicators only.

##### [280-10-55-37](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-37)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [280-10-55-38](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-38)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [280-10-55-39](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-39)

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The intent of the threshold criterion of paragraph [280-10-50-12(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-12) is to require an evaluation of the magnitude of each segment profit or loss compared with a combined reported profit and loss of all operating segments, assuming profit or loss is determined on a consistent basis. That combined measure of all segment profits and losses should approximate (absent any reconciling items) the consolidated amount.

##### [280-10-55-40](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-40)

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In the event that segments are evaluated based on different measures of segment profit or loss, the threshold criterion of paragraph [280-10-50-12(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-12) should be applied to a consistent measure of segment profit or loss that is determined for internal reporting purposes for each segment, whether or not that measure is consistently used by the chief operating decision maker for purposes of evaluating segment performance. For example, assume that the measure of segment profit or loss used by the chief operating decision maker is a different measure for each segment (for example, if the chief operating decision maker uses net income for purposes of evaluating the performance of Segments A and F but uses operating income for purposes of evaluating the performance of Segments B, C, D, and E). In this Case, the 10 percent of segment profit thresholds should be based on either operating income or net income of the segments. This would not affect the requirement in paragraph [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) to disclose the actual measure of segment profit or loss that is used by the chief operating decision maker for purposes of evaluating each reportable segment (that is, the amounts reported for segment profit or loss would be net income for Segments A and F and operating income for Segments B, C, D, and E) if the public entity discloses only one measure of a segment’s profit or loss. This also would not affect the requirement in paragraph [280-10-50-28A](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-28A) if the public entity discloses more than one measure of a segment’s profit or loss.

##### [280-10-55-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-41)

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Because total external revenues of the segments identified as reportable in paragraph [280-10-55-31](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-31) only constitute 73 percent of consolidated external revenues (38 percent + 35 percent), an additional segment must be identified for reporting. Segment E is the next largest segment by percentage of external revenues. However, it is not necessarily required to be identified as a reportable segment in order to meet the 75 percent revenue test.

##### [280-10-55-42](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-42)

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Paragraph [280-10-50-14](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-14) states that additional operating segments need to be identified as reportable segments (even if they do not meet the criteria in paragraph [280-10-50-12](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-12)) until at least 75 percent of total consolidated revenue is included in reportable segments. Although in many instances it may be most logical that the next largest segment (in terms of revenues) be identified, paragraph [280-10-50-14](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-14) does not require that the additional segment or segments identified to satisfy this requirement be the next largest by any parameter. Therefore, in this Case, Segment A, C, E, or F may be identified as a reportable segment.

##### [280-10-55-43](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-43)

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Assume that operating income (loss) of each of the six segments is as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-3409C17D-5E72-44DC-B233-C5C850E0AF4F-low.gif)
    
    Operating Income (Loss) Segment A $1 Segment B (5) Segment C 2 Segment D 9 Segment E 9 Segment F (1) Consolidated income $15
    
    -   Assume that based on the above information (and an evaluation of revenues and assets) Segments A and C do not meet any of the quantitative threshold criteria. The public entity chooses to apply the aggregation criteria of paragraph [280-10-50-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-11). Segments B and E meet all of the aggregation criteria and the public entity aggregates them into a single operating segment. When the quantitative thresholds are then evaluated, Segment C (which previously did not meet any of the quantitative thresholds) now meets the 10 percent of segment profit or loss criterion.

##### [280-10-55-44](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-44)

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Threshold calculations based on the above assumptions are as follows.

-   -   ![](https://asc.understandingaccounting.org/asc-img/GUID-6ABE2173-8101-43AD-B494-D92B251AE567-low.gif)
        
        Prior to Aggregation Subsequent to Aggregation Combined reported profits 21.0 16.0 Combined reported losses (6.0) (1.0) Greater absolute amount 21.0 16.0 10 percent threshold 2.1 1.6

##### [280-10-55-45](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-45)

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Segment C, which previously did not meet the quantitative thresholds but subsequent to the first level of aggregation meets one of the quantitative thresholds, would be considered a reportable segment. This Subtopic provides the order of the steps that should be performed for purposes of identifying reportable segments. That process is also diagrammed in paragraph [280-10-55-26](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-26) and further explained in Example 2, Case A (see paragraphs

[280-10-55-33 through 55-34](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-33)

). This Subtopic requires that segments first be identified; then identified segments may be aggregated into a single segment; and then identified segments (as revised for aggregation, if applicable) are measured against the quantitative thresholds to determine if they are reportable. The fact that one segment did not meet the quantitative thresholds prior to the aggregation of other segments, in accordance with paragraph [280-10-50-11](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-11), does not preclude it from being considered a reportable segment subsequent to that aggregation.

##### [280-10-55-46](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-46)

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Following are specific illustrations of the disclosures that are required by this Subtopic. The formats in the examples are not requirements, but the information should be formatted in the most understandable manner in the specific circumstances. The following Cases are for a hypothetical public entity referred to as Diversified Company that has multiple reportable segments and chooses to disclose more than one measure of a segment’s profit or loss that are used by the chief operating decision maker in assessing segment performance and deciding how to allocate resources.

##### [280-10-55-47](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-47)

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The following is an example of the disclosure of descriptive information about a public entity's reportable segments.

1.  a
    
    Description of the types of products and services from which each reportable segment derives its revenues (see paragraph [280-10-50-21(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-21)).
    
    -   Diversified Company has five reportable segments: auto parts, motor vessels, software, electronics, and finance. The auto parts segment produces replacement parts for sale to auto parts retailers. The motor vessels segment produces small motor vessels to serve the offshore oil industry and similar businesses. The software segment produces application software for sale to computer manufacturers and retailers. The electronics segment produces integrated circuits and related products for sale to computer manufacturers. The finance segment is responsible for portions of the company's financial operations including financing customer purchases of products from other segments and real estate lending operations in several states.
        
2.  b
    
    Measures of segment profit or loss and segment assets (see paragraph [280-10-50-29](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29)).
    
    -   The accounting policies of the segments are the same as those described in the summary of significant accounting policies except that pension expense for each segment is recognized and measured on the basis of cash payments to the pension plan. Diversified Company evaluates performance for all of its reportable segments except the finance segment based on both segment gross profit and profit or loss from operations before interest and income taxes. The finance segment’s performance is evaluated based on pretax profit or loss.
        
3.  bb
    
    How the chief operating decision maker uses the reported measures of the segment’s profit or loss (see paragraph [280-10-50-29(f)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29)).
    
    -   For the auto parts, motor vessels, software, and electronics segments, the chief operating decision maker uses both segment gross profit and segment profit or loss from operations before interest and income taxes to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The chief operating decision maker considers budget-to-actual variances on a monthly basis for both profit measures when making decisions about allocating capital and personnel to the segments. The chief operating decision maker also uses segment gross profit for evaluating product pricing and segment profit or loss from operations before interest and income taxes to assess the performance for each segment by comparing the results and return on assets of each segment with one another and in the compensation of certain employees.
        
    -   For the finance segment, the chief operating decision maker uses segment pretax profit or loss to allocate resources (including employees, financial, or capital resources) to that segment in the annual budget and forecasting process and uses that measure as a basis for evaluating lending terms for customer loans. The chief operating decision maker also uses segment pretax profit or loss to assess the performance of the finance segment by monitoring the margin between interest revenue and interest expense.
        
4.  c
    
    Diversified Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices.
    
5.  d
    
    Factors that management used to identify the public entity's reportable segments (see paragraph [280-10-50-21(a)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-21)).
    
    -   Diversified Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. Most of the businesses were acquired as a unit, and the management at the time of the acquisition was retained.
        
6.  e
    
    The title and position of the individual or the group identified as the chief operating decision maker (see paragraph [280-10-50-21(c)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-21)).
    
    -   Diversified Company’s chief operating decision maker is the chief executive officer.

##### [280-10-55-48](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-48)

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The following tables illustrate a format for presenting information about reported segment revenue, measures of a segment’s profit or loss, significant segment expenses, and measure of a segment's assets (see paragraphs [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22), [280-10-50-25](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-25), and

[280-10-50-26A through 50-26C](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-26A)

) for the current reporting period. The tables do not illustrate comparative period disclosures. Diversified Company does not allocate income taxes or unusual items to segments. In addition, not all segments have significant noncash items other than depreciation and amortization in reported profit or loss. The amounts in this Example are assumed to be the amounts in management’s reports that are regularly provided to the chief operating decision maker, including interest revenue and interest expense. The following tables also illustrate a format for presenting the reconciliations of reportable segment revenues and measures of profit or loss to Diversified Company’s consolidated totals (see paragraph [280-10-50-30(a) through (b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-30)).

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-0E38CBEC-49B4-4065-9822-552091C07258-low.gif)
    
    Auto Parts Motor Vessels Software Electronics Finance Total Revenues from external customers " $3,000 " " $5,000 " " $9,500 " " $12,000 " " $5,000 " (a) " $34,500 " Intersegment revenues - - " 3,000 " " 1,500 " - " 4,500 " " 3,000 " " 5,000 " " 12,500 " " 13,500 " " 5,000 " " 39,000 " Reconciliation of revenue Other revenues " 1,000 " (b) Elimination of intersegment revenues " (4,500)" Total consolidated revenues " $35,500 " \[Content moved from the illustration in paragraph 280-10-55-49\] Less: (c) Cost of revenue " 1,700 " " 3,100 " " 2,000 " " 6,800 " - Segment gross profit " 1,300 " " 1,900 " " 10,500 " " 6,700 " - (d) " $20,400 " Less: (c) Research and development expense - - " 3,300 " - - Nonmanufacturing payroll expense (e) 500 900 " 2,600 " " 2,700 " 750 Professional services expense - - " 1,700 " 500 800 Interest expense (finance segment) - - - - " 3,000 " Other segment items (f) 700 " 1,130 " " 2,300 " " 1,600 " (50) Segment profit/(loss) 100 (130) 600 " 1,900 " 500 " $2,970 " Reconciliation of profit or loss (segment profit/(loss)) Other profit or loss 100 (b) "Interest income/(expense), net (excluding finance segment)" " 1,125 " (g) Elimination of intersegment profits (500) Unallocated amounts: Litigation settlement received 500 Other corporate expenses (750) Adjustment to pension expense in consolidation (250) Income before income taxes " $3,195 " Reconciliation of profit or loss (segment gross profit) Total segment gross profit " $20,400 " "Segment operating expenses, net (excluding finance segment)" " (17,930)" (h) Segment profit (finance segment) 500 Other profit or loss 100 (b) "Interest income/(expense), net (excluding finance segment)" " 1,125 " (g) Elimination of intersegment profits (500) Unallocated amounts: Litigation settlement received 500 Other corporate expenses (750) Adjustment to pension expense in consolidation (250) Income before income taxes " $3,195 " \[Content amended and moved from the illustration in paragraph 280-10-55-49\] (a) The revenue from external customers for the finance segment relates to interest and noninterest income. (b) "Revenue and profit or loss from segments below the quantitative thresholds are attributable to four operating segments of Diversified Company. Those segments include a small real estate business, an electronics equipment rental business, a software consulting practice, and a warehouse leasing operation. None of those segments has ever met any of the quantitative thresholds for determining reportable segments." (c) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within the amounts shown. (d) "For the finance segment, the chief operating decision maker uses only pretax profit or loss as the measure to allocate resources and assess segment performance. As a result, segment gross profit is not reported for the finance segment. " (e) The nonmanufacturing payroll expense does not include amounts capitalized on the balance sheet or included within other expense categories. (f) "Other segment items for each reportable segment includes: Auto parts—maintenance, professional services expense, and repairs expense and certain overhead expenses. Motor vessels—marketing expense, professional services expense, occupancy expense, and certain overhead expenses. Software—depreciation and amortization expense, travel expense, office supplies expense, and certain overhead expenses. Electronics—depreciation and amortization expense, marketing expense, occupancy expense, and certain overhead expenses. Finance—depreciation and amortization expense, property tax expense, certain overhead expenses, and other gains or losses." (g) "Interest income/(expense), net (excluding finance segment) of $1,125 comprises (i) consolidated total interest revenue (excluding finance segment) of $3,825 and (ii) consolidated total interest expense (excluding finance segment) of $2,700." (h) "Segment operating expenses, net (excluding finance segment) of $17,930 includes research and development expense, nonmanufacturing payroll expense, professional services expense, and other segment items for the auto parts, motor vessels, software, and electronics segments. "
    
-   ![](https://asc.understandingaccounting.org/asc-img/GUID-3EA95A28-5F76-4D3C-AB14-0FB85D5CFA87-low.gif)

##### [280-10-55-49](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-49)

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The following is an example of reconciliations of reportable segment assets and other significant items to the public entity's consolidated totals (see paragraph [280-10-50-30(c) through (d)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-30)). The public entity's financial statements are assumed not to include discontinued operations.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-508DEB80-A89F-4720-A186-303DF86FFD42-low.gif)
    
    Assets Total assets for reportable segments " $79,000 " Other assets " 2,000 " (a) Elimination of receivables from corporate headquarters " (1,000)" Goodwill not allocated to segments " 4,000 " Other unallocated amounts " 1,000 " Consolidated total " $85,000 " (a) Assets from segments below the quantitative thresholds are attributable to four operating segments of Diversified Company.
    
-   ![](https://asc.understandingaccounting.org/asc-img/GUID-2AC1BB2B-A62F-4B1D-B4CA-59E64B644277-low.gif)
    
    Other Significant Items Segment Totals Adjustments Consolidated Totals Interest revenue " $3,750 " $75 " $3,825 " Interest expense " 2,750 " (50) " 2,700 " Net interest revenue (finance segment only) " 1,000 " - " 1,000 " Expenditures for assets " 2,900 " " 1,000 " " 3,900 " Depreciation and amortization " 2,950 " - " 2,950 " Cost in excess of billing on long-term contracts 200 - 200

##### [280-10-55-50](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-50)

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Effective as of: not established by retrieval timestamps.


The reconciling item to adjust expenditures for assets is the amount of expenses incurred for the corporate headquarters building, which is not included in segment information. None of the other adjustments are significant.

##### [280-10-55-51](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-51)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:22:55.013Z to 2026-09-09T23:22:55.013Z

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Effective as of: not established by retrieval timestamps.


The following illustrates the geographic information required by paragraph [280-10-50-41](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-41). Because Diversified Company's segments are based on differences in products and services, no additional disclosures of revenue information about products and services are required (see paragraph [280-10-50-40](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-40)).

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-9DB2D1ED-88BC-4D11-B465-F3EED2D2275E-low.gif)
    
    Geographic Information Revenues (a) Long-Lived Assets United States " $19,000 " " $11,000 " Canada " 4,200 " - Taiwan " 3,400 " " 6,500 " Japan " 2,900 " " 3,500 " Other foreign countries " 6,000 " " 3,000 " Total " $31,000 " " $24,000 " (a) Revenues are attributed to countries based on location of customer.

##### [280-10-55-52](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-52)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:22:55.013Z to 2026-09-09T23:22:55.013Z

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Effective as of: not established by retrieval timestamps.


The following is an example of the information about major customers required by paragraph [280-10-50-42](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-42). Neither the identity of the customer nor the amount of revenues for each operating segment is required.

-   Revenues from one customer of Diversified Company's software and electronics segments represents approximately $5,000 of the company's consolidated revenues.

##### [280-10-55-53](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-53)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:22:55.013Z to 2026-09-09T23:22:55.013Z

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Effective as of: not established by retrieval timestamps.


The following is an illustration of certain disclosures that are required by this Subtopic for a public entity that has a single reportable segment. The following Cases are for a hypothetical public entity referred to as ABC Company, which has one operating segment. The illustration for ABC Company does not include the entity-wide disclosures required by paragraphs

[280-10-50-39 through 50-42](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-39)

.

##### [280-10-55-54](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-54)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:22:55.013Z to 2026-09-09T23:22:55.013Z

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Effective as of: not established by retrieval timestamps.


The following is an example of the required disclosures about a public entity’s reportable segment.

1.  a
    
    Description of the types of products and services from which the reportable segment derives its revenues (see paragraph [280-10-50-21(b)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-21)).
    
    -   The software segment derives revenues from customers by providing access to cloud computing applications under software-as-a-service arrangements. The most popular cloud computing application is an enterprise resource planning application used primarily by customers to manage functions such as accounting, financial management, project management, and procurement. The service term for the software arrangements is variable, with the median term being approximately five years.
        
2.  b
    
    Measure of segment profit or loss and assets (see paragraph [280-10-50-29](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29)).
    
    -   The accounting policies of the software segment are the same as those described in the summary of significant accounting policies.
        
    -   The chief operating decision maker assesses performance for the software segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income.
        
    -   The measure of segment assets is reported on the balance sheet as total consolidated assets.
        
3.  c
    
    How the chief operating decision maker uses the reported measure of segment profit or loss (see paragraph [280-10-50-29(f)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-29)).
    
    -   The chief operating decision maker uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the software segment or into other parts of the entity, such as for acquisitions or to pay dividends.
        
    -   Net income is used to monitor budget versus actual results. The chief operating decision maker also uses net income in competitive analysis by benchmarking to ABC Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.
        
4.  d
    
    ABC Company does not have intra-entity sales or transfers.
    
5.  e
    
    Factors that management used to identify the public entity’s reportable segments (see paragraph [280-10-50-21(a)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-21)).
    
    -   ABC Company has one reportable segment: software. The software segment provides cloud computing services to customers under software-as-a-service arrangements. ABC Company derives revenue primarily in North America and manages the business activities on a consolidated basis. The technology used in the customer arrangements is based on a single software platform that is deployed to and implemented by customers in a similar manner.
        
6.  f
    
    The title and position of the individual or the group identified as the chief operating decision maker (see paragraph [280-10-50-21(c)](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-21)).
    
    -   ABC Company’s chief operating decision maker is the senior executive committee that includes the chief operating officer, chief financial officer, and the chief executive officer.

##### [280-10-55-55](https://asc.understandingaccounting.org/asc/280/10/#280-10-55-55)

Pending content: no

Source downloaded (UTC): 2026-09-09T23:22:55.013Z to 2026-09-09T23:22:55.013Z

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Effective as of: not established by retrieval timestamps.


The following table illustrates a format for presenting information about reported segment revenue, segment profit or loss, and significant segment expenses. The Example does not separately illustrate all of the information required by paragraphs [280-10-50-22](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-22) and [280-10-50-25](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-25).

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-9130A8CA-D6B4-4265-85D7-112A4AB5ADA0-low.gif)
    
    Software Segment Revenue " $81,800 " Less: Employee expense " 41,000 " Contractor expense " 15,000 " Occupancy and equipment expense " 8,400 " Hosting and data center expense " 1,500 " Other professional services expense 750 Customer acquisition expense 800 Other segment items (a) " 2,500 " Depreciation and amortization expense " 3,200 " Interest expense 600 Income tax expense " 2,000 " Segment net income " 6,050 " Reconciliation of profit or loss Adjustments and reconciling items - Consolidated net income " $6,050 " (a) "Other segment items included in Segment net income includes marketing expense, restructuring expense, foreign currency exchange gains and losses, and other overhead expense."