FAR, Financial Accounting and Reporting

Sources for Segment Reporting

Last reviewed 2026-10-06

The standards and authorities behind PocketCPA's FAR lessons on Segment Reporting. The topic rests on ASC 280.

About this topic

Segment reporting answers a question consolidated totals hide. Inside a diversified company, where does the money come from, and where does it go?

A single bottom line for a business that sells software, hardware, and consulting says nothing about which parts are growing, which are shrinking, and which carry the most risk.

Key points

An operating segment is identified by the chief operating decision maker's internal reports, not by legal entity or product line.
Quantitative thresholds for reportable segments: 10% of combined revenue, absolute profit/loss, or assets.
The 75% test requires reportable segments to cover at least 75% of consolidated external revenue.
Segment disclosures include a measure of profit or loss and total assets; liabilities are disclosed only if regularly reviewed by the CODM.

What the lessons cover

The management approach (ASC 280-10-50-1)
What qualifies as an operating segment (ASC 280-10-50-1)
Aggregating operating segments (ASC 280-10-50-11)
The 10 percent tests for a reportable segment (ASC 280-10-50-12)
The 75 percent external revenue test (ASC 280-10-50-14)
Required segment disclosures (ASC 280-10-50-22)
Entity-wide disclosures (ASC 280-10-50-38)

Authoritative references

ASC 280-10-10-1, the objective and basic principles that aggregation must not obscure.
ASC 280-10-15-2 and 15-3, scope: public entities, and not-for-profit conduit bond obligors.
ASC 280-10-50-1, the first step: identify the operating segments.
ASC 280-10-50-3, an activity that is incurring expenses but has not yet generated income can be an operating segment, because the test is the ability to earn revenue.
ASC 280-10-50-4, the far side of the operating segment definition.
ASC 280-10-50-5, identification of the chief operating decision maker.
ASC 280-10-50-7 through 50-9, the segment manager, the accountability test where components overlap, and the presumption that components based on products and services are the operating segments.
ASC 280-10-50-11, aggregation of operating segments with similar economic characteristics.
ASC 280-10-50-12, the three 10 percent tests: revenue, profit or loss, and assets.
ASC 280-10-50-13, the combination of small segments that individually fail all three tests.
ASC 280-10-50-14, the 75 percent floor of consolidated external revenue.
ASC 280-10-50-15, the "all other segments" category and the description of its revenue sources.
ASC 280-10-50-16 and 50-17, a segment reportable in the preceding period that is of continuing significance, and recasting of prior-period data for a segment that becomes reportable.
ASC 280-10-50-18, the practical ceiling of about ten reportable segments.
ASC 280-10-50-18A through 50-19, the information for a segment that meets none of the thresholds but that management believes is useful to readers.
ASC 280-10-50-20, an entity with one reportable segment is exempt from nothing.
ASC 280-10-50-21, the general information disclosed, including the title and position of the CODM added by ASU 2023-07.
ASC 280-10-50-22, the required segment disclosures.
ASC 280-10-50-25 and 50-26, equity method investments and capital spending, and the disclosure that an item was not provided and why.
ASC 280-10-50-26A, 50-26B and 50-26C, significant segment expenses, other segment items, and the description required even where no significant expense categories are disclosed.
ASC 280-10-50-27, each segment amount is the measure reported to the CODM, not the amount GAAP would produce for the consolidated entity.
ASC 280-10-50-28A and 50-28B, more than one measure of segment profit, and the comparative periods for an additional measure.
ASC 280-10-50-29, the measurement disclosures, including how the CODM uses each reported measure at 50-29(f).
ASC 280-10-50-30 and 50-31, the reconciliations to consolidated totals and the separate identification of each significant reconciling item.
ASC 280-10-50-32 and 50-33, interim disclosures, extended by ASU 2023-07, with comparable data for the preceding year.
ASC 280-10-50-34 and 50-35, recasting prior periods when the segments move.
ASC 280-10-50-38 through 50-42, entity-wide disclosures: products and services, geographic areas, and major customers at 10 percent or more of revenues.
ASC 280-10-55-15D through 55-15F, additional guidance for an entity with a single reportable segment.
ASC 280-10-55-39, one consistent measure across segments, determined for internal reporting purposes.

How PocketCPA uses these sources

Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.