Segment and
Interim
Reporting
13
Electronic Presentation by
Douglas Cloud
Pepperdine University
Segment Reporting
• Large, diversified companies can be viewed as a portfolio of assets operated as divisions or
subsidiaries, often multinational in scope.
• The various components of a large company may
have different profit rates, different degrees and types of risk, and different opportunities for growth
• Generally speaking, segment reporting refers to the supplemental disclosure of revenue, profits, assets,
and other information for selected industry segments of an entity as well as disclosures about its
Business segment is a company’s component that can be differentiated in generating product or service and that component has its own risk and reward which is different from that of other components
Geographical segment is a company’s component that can be differentiated in generating product or service in certain economic areas and that component has its own risk and reward which is different from that of other components.
Segment
Segment
Ten Percent Quantitative Thresholds
Ten Percent Quantitative Thresholds
What is the 10
PSAK 5 specified three 10 percent significance rules.
Separate disclosures are required if an operating segment meets at least
one of the tests on Slides 5 and 6. PSAK 5 specified three 10
percent significance rules.
Separate disclosures are required if an operating segment meets at least
Its reported revenue, including both sales to external customers and intersegment sales or
transfers, is 10 percent or more of the combined revenue, internal and external, of all operating segments,
The absolute amount of its reported profit or loss
is 10 percent or more of the greater, in absolute amount, of (a) the combined reported profit of all operating segments that reported a profit or (b) the combined reported loss of all segments that
reported a loss.
Ten Percent Quantitative Thresholds
Ten Percent Quantitative Thresholds
Its assets are 10 percent or more of the combined
assets of all operating segments.
Ten Percent Quantitative Thresholds
Illustration of 10 Percent Tests
Illustration of 10 Percent Tests
PT Induk owns 80 percent of PT Anak’ common stock. PT Anak reports a profit of Rp50,000,000 for 20X1 and pays dividends of Rp3,000,000. The December 31,
20X1, balances in PT Anak’ stockholders’ equity accounts total Rp300,000,000, of which the
noncontrolling interest is 20 percent.
PT Induk owns 80 percent of PT Anak’ common stock. PT Anak reports a profit of Rp50,000,000 for 20X1 and pays dividends of Rp3,000,000. The December 31,
20X1, balances in PT Anak’ stockholders’ equity accounts total Rp300,000,000, of which the
noncontrolling interest is 20 percent.
PT Induk acquires 40 percent of PT Baruna Jaya stock on January 1, 20X1, for a cost of Rp160,000,000, which is equal to the book value of the stock on that date. PT Baruna Jaya earns Rp80,000,000 in profit during 20X1 and pays Rp20,000,000 in dividends.
PT Induk acquires 40 percent of PT Baruna Jaya stock on January 1, 20X1, for a cost of Rp160,000,000, which is equal to the book value of the stock on that date. PT Baruna Jaya earns Rp80,000,000 in profit during 20X1 and pays Rp20,000,000 in dividends.
The equity method is used to account for the PT Baruna Jaya investment.
Ten Percent Revenue Test
Ten Percent Revenue Test
Segment Percent of Combined Reportable Segment Revenue Revenue of Rp600,000,000 Segment
Food Products Rp323,000,000 53.8%
Plastic and Packaging 113,000,000 18.8 Consumer and Commercial45,000,000 7.5 Health and Scientific 86,000,000 14.3
Chemicals 33,000,000 5.5
*Unrounded percents for segments total to 100 percent.
Ten Percent Profit (Loss) Test
Ten Percent Profit (Loss) Test
Profit Percent of Test Separately Segment (Loss) Amount of Rp279,000,000 Reportable
Food Products Rp198,000,000 71.0%
Asset Test
Plastic and Packaging 375,000,000 29.4 Consumer and Commercial100,000,000 7.8 Health and Scientific 310,000,000 24.3
Asset Test
Asset Test
Items comprising each segment’s assets are defined by management.
Seventy-Five Percent Revenue Test
Seventy-Five Percent Revenue Test
Sales to unaffiliated customer by reportable segments:
Food Products Rp317,000,000
Plastic and Packaging 95,000,000
Health and Science 86,000,000
Total of reportable segments Rp498,000,000
Consolidated revenue 572,000,000
Reportable segments’ percentage of
consolidated revenue 87.1%
Rp498,000,000
Because this percentage if equal to or greater than 75 percent, no further operating
Because this percentage if equal to or greater than 75 percent, no further operating
Reporting Segment Information
Reporting Segment Information
PSAK 5 states that the following must be disclosed for each
segment determined to be separately reportable.
PSAK 5 states that the following must be disclosed for each
General information about (a) how the company
identifies each separately reportable segments, and (b) the types of products and services from which each reportable segment earns its revenue.
Amounts for each separately reportable segment:
(a) each segment’s profit or loss and the
measurement procedures used to determine the profit or loss, and (b) each segment’s assets and liabilities
General information about (a) how the company
identifies each separately reportable segments, and (b) the types of products and services from which each reportable segment earns its revenue.
Amounts for each separately reportable segment:
(a) each segment’s profit or loss and the
measurement procedures used to determine the profit or loss, and (b) each segment’s assets and liabilities
Reporting Segment Information
Reporting Segment Information
Continued
Measures of segment profit or loss: (a) revenues
from external sales, (b) revenues from
transactions with other operating segments of the company, (c) interest revenue, (d) interest
expense, (e) depreciation and amortization expense, (f) equity in the income of investees accounted for by equity method, (g) income tax expense or benefit, (h) extraordinary items, (i) other significant non cash items
Measures of segment profit or loss: (a) revenues
from external sales, (b) revenues from
transactions with other operating segments of the company, (c) interest revenue, (d) interest
expense, (e) depreciation and amortization expense, (f) equity in the income of investees accounted for by equity method, (g) income tax expense or benefit, (h) extraordinary items, (i) other significant non cash items
Reporting Segment Information
Segment assets and liabilities: (a) the amount of
investment in equity method investees and (b) the amount of liabilities.
Reconciliations to consolidated totals.
Segment assets and liabilities: (a) the amount of
investment in equity method investees and (b) the amount of liabilities.
Reconciliations to consolidated totals.
Reporting Segment Information
Income statements for the cumulative
year-to-date time period and for the
corresponding period of the prior fiscal
year.
A balance sheet at the end of the current
semi-annual and a balance sheet at the end
of the corresponding interim period of the
previous year.
Income statements for the cumulative
year-to-date time period and for the
corresponding period of the prior fiscal
year.
A balance sheet at the end of the current
semi-annual and a balance sheet at the end
of the corresponding interim period of the
previous year.
Interim Reports Generally
Contain-- A statement of cash flows as of the end of the
current cumulative year-to-date period, and for the same time span for the prior year.
Notes to financial report
A statement of cash flows as of the end of the
current cumulative year-to-date period, and for the same time span for the prior year.
Notes to financial report
Interim Reports Generally
Contain-- Estimated gross profit rates may be used to
determine an interim period’s cost of goods sold.
Inventory losses due to an apparent permanent
decline in market price are recognized in the period of decline using the
Companies using a standard cost system for
