Describe the three tests to identify reportable operating segments.

Reportable segment is an exploitable segment that makes up at least 10 percent of the overall businesss revenue or assets (Cromwell, 2017).

There are three test that help identify reportable operating segments. The FASB established three tests for identifying operating segments for which separate disclosure is required: revenue test, profit or loss test, and an asset test (Hoyle, Shaefer, Doupnik, pg. 365).

• Revenue Test states that the segment revenues, both external and inter segment are 10 percent or larger of the combined reported profit of all profitable segments or the combined reported loss of all segments incurring a loss (Hoyle, Shaefer, Doupnik, pg.365).
• Profit loss test is applied when segment profit or loss is 10 percent or more of the larger (in absolute terms) of the combined reported profit of all profitable segments or the combined reported loss of all segments incurring a loss (Hoyle, Shaefer, Doupnik, pg.365).
• Asset test is the final of the three. This test is when segment assets are 10 percent or higher of the combined assets of all operating segments (Hoyle, Shaefer, Doupnik, pg.365).

You must determine the profit or loss, assets, and revenues of the segment to apply the test. Non-traceable revenues and expenses are not considered when conducting these tests because corporate headquarters is not a separate unit for segment reporting (Hoyle, Shaefer, pg.365).

• Can you clarify - do you have to meet 1 of the 3 or all 3 - - - to be considered a re portable operating segment?