Run the 10% tests exactly as written (including the greater-of profit-or-loss base), check aggregation against all five criteria, verify 75% coverage, and plan the new ASU 2023-07 disclosures — with your numbers, in your browser.
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Segment reporting is a perennial SEC comment-letter topic because the mechanics are precise and the shortcuts are tempting. It starts with identification: an operating segment under ASC 280-10-50-1 is a component that earns revenues and incurs expenses, whose operating results the chief operating decision maker regularly reviews to allocate resources and assess performance, and for which discrete financial information exists. Your CODM's actual reporting package — not your org chart — defines the segments.
Then come the quantitative thresholds of ASC 280-10-50-12, and the details matter. The revenue test includes intersegment revenue on both sides. The profit-or-loss test is the one teams get wrong most often: the base is the greater, in absolute amount, of the combined profit of all profitable segments or the combined loss of all loss-making segments — not consolidated net income. A segment can look immaterial against net income and still be reportable. The asset test rounds out the trio, and meeting any one test makes the segment reportable.
Aggregation is the other pressure point. ASC 280-10-50-11 permits combining operating segments only when it is consistent with the standard's core principle, the segments share similar economic characteristics, and they are similar in all five enumerated criteria — products and services, production processes, class of customer, distribution methods, and regulatory environment. After aggregation and the 10% tests, the 75% coverage check (ASC 280-10-50-14) can still force additional segments into the disclosure. And ASU 2023-07 now layers on significant-segment-expense disclosure, CODM identification, and interim reporting — even for single-segment companies.
This analyzer runs every test with your numbers, including the greater-of base and the five-criteria aggregation screen, and flags what your disclosure is missing. All computation stays in your browser.
An operating segment is reportable if it meets ANY of the three 10% tests in ASC 280-10-50-12: revenue (external plus intersegment) of 10% or more of combined revenue; absolute profit or loss of 10% or more of the greater of combined profits of profitable segments or combined losses of loss segments; or assets of 10% or more of combined assets.
It uses a "greater of" base: compare the segment's absolute profit or loss to the GREATER of (a) the combined reported profit of all segments that did not report a loss and (b) the absolute combined loss of all segments that reported losses. Using total net income as the base is a common error.
Only when aggregation is consistent with ASC 280's objective, the segments have similar economic characteristics, AND they are similar in all five criteria of ASC 280-10-50-11: products/services, production processes, customer class, distribution methods, and regulatory environment. All five — four out of five fails.
ASC 280-10-50-14 requires the external revenue of reportable segments to be at least 75% of total consolidated external revenue. If not, additional segments must be reported until the threshold is met, even if they individually fail all the 10% tests.
ASU 2023-07 requires disclosure of significant segment expenses regularly provided to the chief operating decision maker, other segment items, the CODM's title and position, and extends most annual segment disclosures to interim periods. It applies to all public entities, including those with a single reportable segment.