Segment Reporting

Last updated on February 14, 2018. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective
Due Process Documents
*Decisions Reached at the Last Meeting
*Tentative Board Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates
*Background Information
Contact Information

Project Objective

The objective of this project is to undertake improvements to the segment aggregation criteria and disclosures to provide users with more decision-useful information about the reportable segments of a public entity.

Due Process Documents

No due process documents have been issued.

*Decisions Reached at the Last Meeting (February 7, 2018)

The Board discussed the implications associated with potentially modifying and re-ordering the process for determining reportable segments and moving the quantitative threshold tests earlier in that process. The Board also discussed potential changes to the quantitative thresholds (of revenue, profit or loss, and assets) that require public entities to separately disclose information about operating segments that meet those thresholds. The purpose of the discussion was to establish the parameters of the extended preparer outreach that the Board and staff intend to undertake this year.

*Tentative Board Decisions Reached to Date

December 13, 2017

The Board discussed the project plan for the segment reporting project. The Board also discussed additional information that it would like the staff to include in its research and analysis for discussion at future Board meetings, including (1) the effect of removing the aggregation criteria on goodwill impairment testing and (2) the effect of requiring additional segment information on audit costs.
The Board also discussed the interaction between the segment reporting project and the project on disclosure framework: disclosure review, inventory. The Board had previously decided in that disclosure project to require that a public business entity disclose, in annual and interim periods, inventory by reportable segment or by component for each reportable segment if that information is regularly provided to the chief operating decision maker.

The Board discussed including this previous decision on inventory disclosure within the segment reporting project, rather than making a standalone change to the Topic 280, Segment Reporting, disclosure requirements within the project on disclosure framework: disclosure review, inventory.

September 20, 2017
The Board decided to add a project to the technical agenda on segment reporting that will focus on improvements to the segment aggregation criteria and disclosure requirements. 

Segment Aggregation Criteria

For segment aggregation criteria, the Board decided it could:
  1. Move the reportable segment thresholds to form part of the aggregation guidance, that is, develop a bright-line threshold for aggregation.
  2. Remove the aggregation criteria, but retain the practical limit guidance.
The Board directed the staff to perform additional outreach with smaller and middle size public companies to understand the effect of pursing the above alternatives.

Segment Disclosure Requirements 

For segment disclosure requirements, three alternatives were considered. The Board could:
  1. Add individual pieces of segment information to the list of requirement disclosures.
  2. Require the disclosures in Topic 280, Segment Reporting, to be reported in a table.
  3. Require a table of regularly reviewed information based on how it relates to the lines in the financial statements.
Board members expressed a preference for Alternatives 1 and 2 but asked the staff to perform additional research to understand the cost of implementing all of those approaches.

*Next Steps

The staff will bring an analysis of additional issues in the future.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
*February 7, 2017 Board Meeting—Discussed potentially re-ordering the reportable segments process and moving the size tests earlier within that process.
December 13, 2017 Board Meeting—Discussed the project plan and additional research requests.
September 20, 2017 Board Meeting—Project was added to the Technical Agenda.

*Background Information

In August 2016, the Board issued an Invitation to Comment (ITC), Agenda Consultation, to solicit feedback about the major financial reporting issues that the FASB should consider in its future technical agenda. Many respondents to the ITC commented that a fundamental reconsideration of Topic 280, Segment Reporting, was not needed; however, targeted improvements were warranted to the segment aggregation criteria and the disclosure requirements to provide users with more decision-useful information.

In May 2017, the Board discussed potential ways to improve the segment aggregation criteria and disclosure requirements and directed the staff to perform outreach with users, preparers, and accounting firms to assess the effect and viability of potential alternatives.

In September 2017, the Board considered a summary of the outreach and decided to add a project on segment reporting to the technical agenda.

Contact Information

Lauren Mottley
Project Manager

Andy Bologna
Practice Fellow

Carly Lapins
Postgraduate Technical Assistant

Gabrielle Roe
Postgraduate Technical Assistant