Advanced Accounting Chapter 8 Essay

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Chapter 8
Segment and Interim Reporting
Chapter Outline I. FASB Accounting Standards Codification Topic 280, Segment Reporting (FASB ASC 280), provides current guidance on segment reporting.
A. ASC 280 follows a management approach in which segments are based on the way that management disaggregates the enterprise for making operating decisions; these are referred to as operating segments.
B. Operating segments are components of an enterprise which meet three criteria.
1. Engage in business activities and earn revenues and incur expenses.
2. Operating results are regularly reviewed by the chief operating decision-maker to assess performance and make resource allocation decisions.
3. Discrete financial information is available
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GAAP. Major differences between IFRS 8 and U.S. GAAP are:
1. IFRS 8 requires disclosure of total assets and total liabilities by operating segment if these are regularly reported to the chief operating decision maker. U.S. GAAP requires disclosure of segment assets but does not require disclosure of segment liabilities.
2. IFRS 8 specifically includes intangibles in the scope of “non-current assets” to be disclosed by geographic area. Authoritative accounting literature (FASB ASC) indicates that “long-lived assets” to be disclosed by geographic area excludes intangibles.
3. U.S. GAAP requires an entity with a matrix form of organization to determine operating segments based on products and services. IFRS 8 allows such an entity to determine operating segments based on either products and services or geographic areas.

IV. To provide investors and creditors with more timely information than is provided by an annual report, the U.S. Securities and Exchange Commission (SEC) requires publicly traded companies to provide financial statements on an interim (quarterly) basis.
A. Quarterly statements need not be audited.

V. FASB Accounting Standards Codification Topic 270, Interim Reporting (FASB ASC 270) requires companies to treat interim periods as integral parts of an annual period rather than as discrete accounting periods in their own right.
A. Generally, interim statements should be prepared following the same accounting

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