The FASB has just announced new guidance on segment reporting. This is effective for all public entities for fiscal years beginning after December 15, 2023 (so, all calendar years beginning January 1, 2024) and for interim periods beginning after December 15, 2024. They permit early adoption, so here are 5 things you need to know ahead of the deadline:
1 | Significant Expense
They require disclosures for each reportable segment, which are the significant expenses that are regularly provided to the chief operating decision maker (CODM). These disclosures then must exist within each reported measure of segment profit or loss (the “significant expense principle”).
2 | Other Segment Items
The FASB requires disclosure of the amount of other segment items by reportable segment and a description of the composition of those items. This is the difference between segment revenue less the segment expense disclosed under the significant expense principle and each reported measure of segment profit or loss.
3 | Interim Periods
Companies must provide all annual disclosures about a reportable segment’s profit or loss and assets that ASC 280 currently requires, in interim periods. Currently, these are only provided for annual periods.
4 | Single Reportable Unit
Companies with a single reportable unit must provide all the disclosures required under this new guidance and all existing segment disclosures.
5 | CODM Details
The FASB requires disclosure of the title and position of the CODM as well as an explanation of how the CODM uses the reported measure(s) of segment profit or loss in order to assess segment performance and determine the allocation of resources.
