SFAS131 – Disclosures About Segments of an Enterprise and Related Information

Summaries

Reportable Segments:

Consist at least 10% of Revenues or Operating profit or Loss or combined identifiable asset of the whole enterprise

Companies need to report the profitability (e.g. operating profit) and identifiable asset for their reportable segments, and the following (if reported internal to operating decision makers):

1)      sales (intersegment and unaffiliated companies)

2)      Interest expense and income

3)      Depreciation/ amortization/

4)      Usual and extraordinary items

5)      Income tax expense

6)      Capital expenditures

7)      Investment income

8)      Sales >10% customer/government

Difficulties:

1)      Lack of liability data

2)      Intersegment transfer mispriced

3)      Lack of cash flow data

4)      Effect of exchange rate and extraordinary items and cyclicality.