Slide AKT 307 AKL 1 11
13-1
Baker / Lembke / King
Segment and
Interim
Reporting
13
Electronic Presentation by
Douglas Cloud
Pepperdine University
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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
foreign operations.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-2
13-3
Segment
PSAK 5 provides definition on several terms:
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.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Ten Percent Quantitative Thresholds
13-4
PSAK
PSAK 55 specified
specified three
three 10
10
percent
percent significance
significance rules.
rules.
What
is
the
10
What is the 10
Separate
Separate disclosures
disclosures are
are required
required ifif
percent
percent significance
significance an
an operating
operating segment
segment meets
meets at
at least
least
rule
concerning
rule concerning
one
one of
of the
thetests
tests on
on Slides
Slides 55 and
and 6.
6.
segment
segment disclosure?
disclosure?
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Ten Percent Quantitative Thresholds
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.
Continued
Continued
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-5
Ten Percent Quantitative Thresholds
Its assets are 10 percent or more of the combined
assets of all operating segments.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-6
Illustration of 10 Percent Tests
13-7
PT
PTInduk
Induk owns
owns 80
80 percent
percent of
of PT
PTAnak’
Anak’common
common stock.
stock.
PT
PTAnak
Anak reports
reports aa profit
profit of
of Rp50,000,000
Rp50,000,000 for
for 20X1
20X1 and
and
pays
pays dividends
dividends of
of Rp3,000,000.
Rp3,000,000. The
The December
December 31,
31,
20X1,
20X1, balances
balances in
in PT
PTAnak’
Anak’stockholders’
stockholders’equity
equity
accounts
accounts total
total Rp300,000,000,
Rp300,000,000, of
of which
which the
the
noncontrolling
noncontrolling interest
interest isis 20
20 percent.
percent.
The equity method is used to account for the PT Baruna Jaya investment.
PT
PTInduk
Induk acquires
acquires 40
40 percent
percent of
of PT
PTBaruna
Baruna Jaya
Jaya stock
stock
on
on January
January 1,
1, 20X1,
20X1,for
for aacost
cost of
of Rp160,000,000,
Rp160,000,000,which
which
isis equal
equal to
to the
the book
book value
valueof
of the
the stock
stock on
on that
that date.
date. PT
PT
Baruna
Baruna Jaya
Jaya earns
earns Rp80,000,000
Rp80,000,000 in
in profit
profit during
during 20X1
20X1
and
and pays
pays Rp20,000,000
Rp20,000,000 in
in dividends.
dividends.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-8
Ten Percent Revenue Test
Segment
Segment
Revenue
Percent of Combined
Reportable
Revenue of Rp600,000,000
Segment
Food Products
Rp323,000,000
Plastic and Packaging
113,000,000
Consumer and Commercial45,000,000
Health and Scientific
86,000,000
Chemicals
33,000,000
Total
Rp600,000,000
53.8%
18.8
7.5
14.3
5.5
100.0%*
*Unrounded percents for segments total to 100 percent.
McGraw-Hill/ Irwin
Yes
Yes
No
Yes
No
Separately
reportable?
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-9
Ten Percent Profit (Loss) Test
Segment
Profit
(Loss)
Percent of Test
Amount of Rp279,000,000
Food Products
Rp198,000,000
Plastic and Packaging
59,000,000
Consumer and Commercial(25,000,000)
Health and Scientific
22,000,000
Chemicals
(9,000,000)
71.0%
21.1
9.0
7.9
3.2
Separately
Reportable
Yes
Yes
No
No
No
Separately
reportable?
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-10
Asset Test
Segment
Reportable
Percent of
Segment
Test Amount of
Assets
Rp1,276,000,000
Food Products
Rp 411,000,000
Plastic and Packaging
375,000,000
Consumer and Commercial 100,000,000
Health and Scientific
310,000,000
Chemicals
80,000,000
Total
Rp1,276,000,000
32.2%
29.4
7.8
24.3
6.3
100.0%
Separately
Yes
Yes
No
Yes
No
Separately
reportable?
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-11
Asset Test
Items
Items comprising
comprising each
each
segment’s
segment’s assets
assets are
are
defined
defined by
by management.
management.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Seventy-Five Percent Revenue Test
13-12
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%
Because
Becausethis
thispercentage
percentageififequal
equalto
toor
orgreater
greater
than
than75
75percent,
percent,no
nofurther
furtheroperating
operating
segments
segmentsmust
mustbe
beseparately
separatelyreported.
reported.
McGraw-Hill/ Irwin
Rp498,000,000
Rp572,000,000
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-13
PSAK
PSAK55 states
states that
that the
the following
following
must
must be
be disclosed
disclosed for
for each
each
segment
segment determined
determined to
to be
be
separately
separately reportable.
reportable.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-14
General
General information
information about
about (a)
(a) how
how the
the company
company
identifies
identifies each
each separately
separately reportable
reportable segments,
segments,
and
and (b)
(b) the
thetypes
types of
of products
products and
and services
services from
from
which
which each
each reportable
reportablesegment
segment earns
earns its
its revenue.
revenue.
Amounts
Amounts for
for each
each separately
separately reportable
reportablesegment:
segment:
(a)
(a) each
each segment’s
segment’s profit
profit or
or loss
loss and
and the
the
measurement
measurement procedures
procedures used
used to
to determine
determine the
the
profit
profit or
or loss,
loss, and
and (b)
(b) each
each segment’s
segment’s assets
assets and
and
liabilities
liabilities
Continued
Continued
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-15
Measures
Measures of
of segment
segment profit
profit or
or loss:
loss: (a)
(a) revenues
revenues
from
fromexternal
external sales,
sales, (b)
(b) revenues
revenues from
from
transactions
transactions with
with other
other operating
operating segments
segments of
of the
the
company,
company, (c)
(c) interest
interest revenue,
revenue, (d)
(d) interest
interest
expense,
expense, (e)
(e) depreciation
depreciation and
and amortization
amortization
expense,
expense, (f)
(f) equity
equity in
in the
the income
income of
of investees
investees
accounted
accounted for
for by
by equity
equity method,
method,(g)
(g) income
incometax
tax
expense
expense or
or benefit,
benefit, (h)
(h) extraordinary
extraordinary items,
items, (i)
(i)
other
other significant
significant non
non cash
cash items
items
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-16
Segment
Segment assets
assets and
and liabilities:
liabilities: (a)
(a) the
the amount
amount of
of
investment
investment in
in equity
equity method
method investees
investees and
and (b)
(b) the
the
amount
amount of
of liabilities.
liabilities.
Reconciliations
Reconciliations to
to consolidated
consolidated totals.
totals.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Interim Reports Generally Contain--
13-17
Income
Income statements
statements for
for the
the cumulative
cumulative yearyear-
to-date
to-date time
time period
period and
and for
for the
the
corresponding
corresponding period
period of
of the
the prior
prior fiscal
fiscal
year.
year.
A
Abalance
balance sheet
sheet at
at the
the end
end of
of the
the current
current
semi-annual
semi-annual and
and aa balance
balance sheet
sheet at
at the
the end
end
of
of the
the corresponding
corresponding interim
interim period
period of
of the
the
previous
previous year.
year.
Continued
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Interim Reports Generally Contain--
13-18
A
Astatement
statement of
of cash
cash flows
flows as
as of
of the
the end
end of
of the
the
current
current cumulative
cumulative year-to-date
year-to-dateperiod,
period,and
and for
for
the
the same
same time
time span
span for
for the
the prior
prior year.
year.
Notes
Notes to
to financial
financial report
report
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Practical Modifications for Determining Interim Income
13-19
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 lower-of-cost-ormarket valuation method. Recoveries of market
prices in later interim periods of the same fiscal
year should be recognized up to the original cost.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Practical Modifications for Determining Interim Income
13-20
Companies using a standard cost system for
inventories should use the same procedure for
computing and reporting variances in an interim
period as used for the fiscal year.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-21
Chapter Thirteen
The
End
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Baker / Lembke / King
Segment and
Interim
Reporting
13
Electronic Presentation by
Douglas Cloud
Pepperdine University
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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
foreign operations.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-2
13-3
Segment
PSAK 5 provides definition on several terms:
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.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Ten Percent Quantitative Thresholds
13-4
PSAK
PSAK 55 specified
specified three
three 10
10
percent
percent significance
significance rules.
rules.
What
is
the
10
What is the 10
Separate
Separate disclosures
disclosures are
are required
required ifif
percent
percent significance
significance an
an operating
operating segment
segment meets
meets at
at least
least
rule
concerning
rule concerning
one
one of
of the
thetests
tests on
on Slides
Slides 55 and
and 6.
6.
segment
segment disclosure?
disclosure?
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Ten Percent Quantitative Thresholds
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.
Continued
Continued
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-5
Ten Percent Quantitative Thresholds
Its assets are 10 percent or more of the combined
assets of all operating segments.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-6
Illustration of 10 Percent Tests
13-7
PT
PTInduk
Induk owns
owns 80
80 percent
percent of
of PT
PTAnak’
Anak’common
common stock.
stock.
PT
PTAnak
Anak reports
reports aa profit
profit of
of Rp50,000,000
Rp50,000,000 for
for 20X1
20X1 and
and
pays
pays dividends
dividends of
of Rp3,000,000.
Rp3,000,000. The
The December
December 31,
31,
20X1,
20X1, balances
balances in
in PT
PTAnak’
Anak’stockholders’
stockholders’equity
equity
accounts
accounts total
total Rp300,000,000,
Rp300,000,000, of
of which
which the
the
noncontrolling
noncontrolling interest
interest isis 20
20 percent.
percent.
The equity method is used to account for the PT Baruna Jaya investment.
PT
PTInduk
Induk acquires
acquires 40
40 percent
percent of
of PT
PTBaruna
Baruna Jaya
Jaya stock
stock
on
on January
January 1,
1, 20X1,
20X1,for
for aacost
cost of
of Rp160,000,000,
Rp160,000,000,which
which
isis equal
equal to
to the
the book
book value
valueof
of the
the stock
stock on
on that
that date.
date. PT
PT
Baruna
Baruna Jaya
Jaya earns
earns Rp80,000,000
Rp80,000,000 in
in profit
profit during
during 20X1
20X1
and
and pays
pays Rp20,000,000
Rp20,000,000 in
in dividends.
dividends.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-8
Ten Percent Revenue Test
Segment
Segment
Revenue
Percent of Combined
Reportable
Revenue of Rp600,000,000
Segment
Food Products
Rp323,000,000
Plastic and Packaging
113,000,000
Consumer and Commercial45,000,000
Health and Scientific
86,000,000
Chemicals
33,000,000
Total
Rp600,000,000
53.8%
18.8
7.5
14.3
5.5
100.0%*
*Unrounded percents for segments total to 100 percent.
McGraw-Hill/ Irwin
Yes
Yes
No
Yes
No
Separately
reportable?
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-9
Ten Percent Profit (Loss) Test
Segment
Profit
(Loss)
Percent of Test
Amount of Rp279,000,000
Food Products
Rp198,000,000
Plastic and Packaging
59,000,000
Consumer and Commercial(25,000,000)
Health and Scientific
22,000,000
Chemicals
(9,000,000)
71.0%
21.1
9.0
7.9
3.2
Separately
Reportable
Yes
Yes
No
No
No
Separately
reportable?
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-10
Asset Test
Segment
Reportable
Percent of
Segment
Test Amount of
Assets
Rp1,276,000,000
Food Products
Rp 411,000,000
Plastic and Packaging
375,000,000
Consumer and Commercial 100,000,000
Health and Scientific
310,000,000
Chemicals
80,000,000
Total
Rp1,276,000,000
32.2%
29.4
7.8
24.3
6.3
100.0%
Separately
Yes
Yes
No
Yes
No
Separately
reportable?
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-11
Asset Test
Items
Items comprising
comprising each
each
segment’s
segment’s assets
assets are
are
defined
defined by
by management.
management.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Seventy-Five Percent Revenue Test
13-12
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%
Because
Becausethis
thispercentage
percentageififequal
equalto
toor
orgreater
greater
than
than75
75percent,
percent,no
nofurther
furtheroperating
operating
segments
segmentsmust
mustbe
beseparately
separatelyreported.
reported.
McGraw-Hill/ Irwin
Rp498,000,000
Rp572,000,000
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-13
PSAK
PSAK55 states
states that
that the
the following
following
must
must be
be disclosed
disclosed for
for each
each
segment
segment determined
determined to
to be
be
separately
separately reportable.
reportable.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-14
General
General information
information about
about (a)
(a) how
how the
the company
company
identifies
identifies each
each separately
separately reportable
reportable segments,
segments,
and
and (b)
(b) the
thetypes
types of
of products
products and
and services
services from
from
which
which each
each reportable
reportablesegment
segment earns
earns its
its revenue.
revenue.
Amounts
Amounts for
for each
each separately
separately reportable
reportablesegment:
segment:
(a)
(a) each
each segment’s
segment’s profit
profit or
or loss
loss and
and the
the
measurement
measurement procedures
procedures used
used to
to determine
determine the
the
profit
profit or
or loss,
loss, and
and (b)
(b) each
each segment’s
segment’s assets
assets and
and
liabilities
liabilities
Continued
Continued
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-15
Measures
Measures of
of segment
segment profit
profit or
or loss:
loss: (a)
(a) revenues
revenues
from
fromexternal
external sales,
sales, (b)
(b) revenues
revenues from
from
transactions
transactions with
with other
other operating
operating segments
segments of
of the
the
company,
company, (c)
(c) interest
interest revenue,
revenue, (d)
(d) interest
interest
expense,
expense, (e)
(e) depreciation
depreciation and
and amortization
amortization
expense,
expense, (f)
(f) equity
equity in
in the
the income
income of
of investees
investees
accounted
accounted for
for by
by equity
equity method,
method,(g)
(g) income
incometax
tax
expense
expense or
or benefit,
benefit, (h)
(h) extraordinary
extraordinary items,
items, (i)
(i)
other
other significant
significant non
non cash
cash items
items
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Reporting Segment Information
13-16
Segment
Segment assets
assets and
and liabilities:
liabilities: (a)
(a) the
the amount
amount of
of
investment
investment in
in equity
equity method
method investees
investees and
and (b)
(b) the
the
amount
amount of
of liabilities.
liabilities.
Reconciliations
Reconciliations to
to consolidated
consolidated totals.
totals.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Interim Reports Generally Contain--
13-17
Income
Income statements
statements for
for the
the cumulative
cumulative yearyear-
to-date
to-date time
time period
period and
and for
for the
the
corresponding
corresponding period
period of
of the
the prior
prior fiscal
fiscal
year.
year.
A
Abalance
balance sheet
sheet at
at the
the end
end of
of the
the current
current
semi-annual
semi-annual and
and aa balance
balance sheet
sheet at
at the
the end
end
of
of the
the corresponding
corresponding interim
interim period
period of
of the
the
previous
previous year.
year.
Continued
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Interim Reports Generally Contain--
13-18
A
Astatement
statement of
of cash
cash flows
flows as
as of
of the
the end
end of
of the
the
current
current cumulative
cumulative year-to-date
year-to-dateperiod,
period,and
and for
for
the
the same
same time
time span
span for
for the
the prior
prior year.
year.
Notes
Notes to
to financial
financial report
report
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Practical Modifications for Determining Interim Income
13-19
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 lower-of-cost-ormarket valuation method. Recoveries of market
prices in later interim periods of the same fiscal
year should be recognized up to the original cost.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Practical Modifications for Determining Interim Income
13-20
Companies using a standard cost system for
inventories should use the same procedure for
computing and reporting variances in an interim
period as used for the fiscal year.
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
13-21
Chapter Thirteen
The
End
McGraw-Hill/ Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.