Segment Reporting 10% Tests: Revenue, Profit or Loss, and Assets
A segment can become reportable by meeting a threshold based on revenue, profit or loss, or assets.
Revenue test
Compare a segment's revenue with the combined revenue of all operating segments.
Profit or loss test
Compare the absolute amount of the segment's profit or loss with the relevant combined benchmark.
Asset test
Compare segment assets with combined segment assets.
Exam strategy
A segment only needs to satisfy one of the quantitative tests to potentially be reportable.
The takeaway
Reportable-segment analysis uses separate 10% tests for revenue, profit or loss, and assets.
Related Summit resources
FAQ
What is the core idea?
Reportable-segment analysis uses separate 10% tests for revenue, profit or loss, and assets.
What should you identify first?
A segment can become reportable by meeting a threshold based on revenue, profit or loss, or assets.
Why does this matter on the CPA Exam?
Learn the quantitative thresholds used to identify reportable operating segments.