The objective of ASC 280, Segment Reporting, is to provide information about the different types of business activities in which a reporting entity engages and the different economic environments in which it operates. This information is intended to help users of the financial statements (1) better understand the reporting entity’s performance, (2) better assess its prospects for future net cash flows, and (3) make more informed judgments about the reporting entity as a whole.

This chapter outlines the application of ASC 280 and includes relevant examples and practical insights.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new FASB guidance requires incremental disclosures in annual and interim periods related to a public entity's reportable segments (particularly on segment expenses) but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments.

This chapter has been updated to reflect the new guidance. The new guidance is effective for annual financial statements of public entities for fiscal years beginning after December 15, 2023 (e.g., in 2024 year-end financial statements for calendar year entities) and in interim periods in fiscal years beginning after December 15, 2024 (e.g., in 2025 interim financial statements for calendar year entities) and should be adopted retrospectively unless impracticable. Early adoption is permitted.

This chapter reflects both the application of the new guidance after adoption of ASU 2023-07 (in FSP 25.2, FSP 25.7, and FSP 25.8) and before (in FSP 25.2A and FSP 25.7A).

ASU 2023-07 also updated the terminology used to refer to a change in previously reported segment information due to changes in facts and circumstances from a “restatement” to a “recasting,” so as not to imply that the previously reported information was incorrect. All references in this chapter to such changes in previously reported information have been updated accordingly to “recast” or “recasting.”