FASB Updates Segment Reporting Disclosures

Other Segment Items

The ASU requires entities to disclose an amount and qualitative description of other segment items for each reportable segment. These items represent the difference between a segment’s profit or loss and segment revenues less significant segment expenses. 

The new guidance requires disclosing other significant items, regardless of whether significant segment expenses are disclosed. Entities that do not disclose significant segment expenses must disclose the expense information used by the CODM to manage operations. For example, entities may disclose that the CODM is regularly provided with only budgeted or forecasted expense information for a reportable segment or that the CODM uses consolidated expense information. 

Other Disclosures

In addition to the significant segment expense information and other segment items, the ASU requires entities to disclose the following: 

• Title and position of the CODM
• Explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources
• Significant changes from prior periods in expense measurement and allocation methods and their effect, if any, on the measure of segment profit or loss
• Changes in the method for allocating centrally incurred expenses and their effect, if any, on the measure of segment profit or loss

Single Reportable Segment Entities

Entities with a single reportable segment must disclose all of the existing disclosures required by ASC 280, as well as the measure of profit or loss used by the CODM to allocate resources and assess performance that is most consistent with U.S. GAAP. 

The ASU highlights that such entities may distinguish the business activities of the single operating segment from those of the consolidated entity. For example, certain functional departments or corporate headquarters may not be part of the single operating segment. In those situations, the CODM may regularly review the operating results and performance of the single operating segment differently than how management assesses the consolidated entity’s performance. Alternatively, if the single operating segment represents the entire consolidated entity, the CODM may regularly review the entity-wide operating results and performance. 

At the Conference, the SEC staff stated that it expects the measure of segment performance for an entity with a single reportable segment that  is managed on a consolidated basis to be consolidated net income.

Recasting of Prior Period Segment Information 

As amended by the ASU, ASC 280 requires entities to recast prior period segment information, including significant segment expenses, in the following situations unless it is impracticable to do so: 

• When the composition of reportable segments changes 
• When significant segment expense categories change due to changes in the segment information regularly provided to the CODM

If recasting prior period significant segment expenses is impracticable, entities must disclose both the new and old significant segment expense categories.

If significant segment expense categories and amounts change due to changes in measurement methods, entities are not required to recast prior period significant segment expenses, but it is preferable to do so. 

Effective Dates and Transition

The following table summarizes transition for the ASU:

Link to the ASU

Appendix: Example Disclosure

The following example has been adapted from the ASU¹ to illustrate how entities can report significant segment expenses and other segment items. This table omits a reconciliation of segment profit and loss to the entity’s consolidated totals for simplicity.

¹ See ASC 280-10-55-48