CHAPTER 18

1. Segment reporting shall apply to

a) Consolidated financial statements of a group only.
b) Separate or individual financial statements of an entity only.
c) Both the separate financial statements of an entity and the consolidated financial
statements of a group.
d) Neither the separate financial statements of an entity nor the consolidated financial
statements of a group.
2. If a financial report contains both the consolidated financial statements of a parent and the
parent’s separate financial statements, segment information is required in
a) The consolidated financial statements only
b) The separate financial statements only
c) Both the separate and consolidated financial statements only
d) Neither the separate nor the consolidated financial statements only
3. An operating segment is not a component of an entity
a) That engages in business activities from which it may earn revenue and incur expenses,
including revenue and expenses relating to transactions with other components of the
same entity.
b) Whose operating results are regularly reviewed by the entity’s chief operating decision
maker.
c) For which discrete information is available.
d) That engages in business activities from which it may earn revenue and incur expenses,
excluding revenue and expenses relating to transactions with other components of the
same entity.
4. Which quantitative threshold is not a requirement in qualifying a reportable segment?
a) The segment revenue, both external and internal, is 10% or more of the combined external
and internal revenue of all operating segments.
b) The absolute amount of profit or loss is 10% or more of the greater between the combined
profit of profitable segments and combined loss of unprofitable segments.
c) The assets of the segment are 10% or more of the combined assets of all operating
segments.
d) The absolute amount of profit or loss is 10% or more of the lesser between the combined
profit of profitable segments and combined loss of unprofitable segments.
5. Which statement is true concerning the 75% overall size test for reportable segments?
a) The total external and internal revenue of all reportable segments is 75% or more of the
entity’s external revenue.
b) The total external revenue of all reportable segments is 75% or more of the entity’s
external and internal revenue.
c) The total external revenue of all reportable segments is 75% or more of the entity’s
external revenue.
d) All statements are not true.
6. What is the term "chief operating decision maker"?
a) It is a manager with a specific title.
b) Must be disclosed by title in the financial reporting for segments.
c) Must be described in the disclosures for the financial reporting for segments.
d) It refers to a function for allocating resources and assessing the performance of operating
segments.
7. Which statement is true with respect to a chief operating decision maker?
a) The term chief operating decision maker is a manager with a specific title.
b) In some cases, the chief operating decision maker could be the chief operating officer or
chief operating executive officer.
c) The board of directors acting collectively could not qualify as the chief operating decision
maker.
d) The chief internal auditor who reports to the board of directors usually plays a very
important role and would generally qualify as chief operating decision maker.
QUESTIONS 18-19

1. What are the disclosures required in relation to operating segments?

a) General information shows the operating segments.
b) Information about segment profit or loss, excluding specified revenue and expense
included in profit or loss, segment assets and segment liabilities.
c) Both A and B
d) Neither A nor B
2. An entity shall not disclose which of the following general information?
a) Factors used to identify the reportable segments, including the basis of organization
b) Types of products and services
c) Names of the board of directors
d) All of these.
3. Segment reporting requires that an entity should provide reconciliations of segment information.
Which is not a required reconciliation?
a) The total revenue of all reportable segments to the entity revenue
b) The total profit or loss of all reportable segments in the entity profit or loss before tax
expense and discontinued operations
c) The total number of major customers of all segments to the total number of major
customers of the entity
d) The total assets of all reportable segments in the entity assets
Answers:
1. C
2. A
3. D
4. D
5. C
6. D
7. B
8. A
9. D
10. C