| Course | ACC-6020 Advanced Accounting |
|---|---|
| Module | Module 8 |
| Paper type | Written Assignment 8: segment and interim financial reporting |
| Length | About 753 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | M.S. in Management in Accounting |
| Updated | October 2026 |
Free sample paper for ACC 6020 Module 8
Which Segments to Report and How to Report a Quarter: Ridgewood Instruments' Segment Tests and Interim Rules
Student Name
M.S. in Management in Accounting, Thomas Edison State University
ACC-6020: Advanced Accounting
Mentor Name
Month Day, Year
Which Segments to Report and How to Report a Quarter: Ridgewood Instruments' Segment Tests and Interim Rules
Introduction
Consolidated statements combine businesses that may differ sharply in growth and risk. Segment reporting shows users the parts as management sees them, and interim reporting gives them results more often than once a year. Both standards rest on judgments about how to divide information without distorting it (Jeter & Chaney, 2011).
Part A: Identifying Reportable Segments
A segment is a part of the business that earns revenue and incurs costs, has its own financial information and is reviewed regularly by the chief operating decision maker. Ridgewood's chief executive reviews six:
A segment is reportable if it meets any of three tests at 10%.
Segments A, B, C and D are reportable. Segment C qualifies even though it lost money, because the profit test uses the absolute value of each segment's result. Segments E and F fail all three tests.
| Segment | Total revenue, including intersegment | Profit or loss | Assets |
|---|---|---|---|
| A: Industrial gauges | $4,200,000 | $900,000 | $6,000,000 |
| B: Sensors (Lakeland) | 2,600,000 | 300,000 | 3,500,000 |
| C: Calibration services | 1,100,000 | (250,000) | 1,400,000 |
| D: Laboratory instruments | 950,000 | 160,000 | 800,000 |
| E: Software subscriptions | 600,000 | (120,000) | 700,000 |
| F: Spare parts online | 550,000 | 40,000 | 600,000 |
| Total | $10,000,000 | | $13,000,000 | |
| Test | Threshold | Segments meeting it | |
| Revenue, including intersegment | 10% of $10,000,000 = $1,000,000 | A, B, C | |
| Profit or loss, in absolute amount | 10% of the greater of total profits of $1,400,000 or total losses of $370,000 = $140,000 | A, B, C, D | |
| Assets | 10% of $13,000,000 = $1,300,000 | A, B, C |
The 75% Test
The reportable segments' external revenue must be at least 75% of consolidated external revenue, or more segments must be added.
At 88%, the four segments satisfy the test, and E and F are combined in an all other category.
| Segment | External revenue |
|---|---|
| A, after $300,000 sold to other segments | $3,900,000 |
| B | 2,600,000 |
| C, after $100,000 sold to other segments | 1,000,000 |
| D | 950,000 |
| Reportable total | 8,450,000 |
| Consolidated external revenue | 9,600,000 |
| Share | 88% |
Required Disclosures
For each reportable segment, Ridgewood must disclose the measure of profit or loss its chief operating decision maker uses, revenues from external customers and from other segments, and, when reviewed, interest, depreciation and amortization, income tax and assets. Since a 2023 update, public companies must also disclose significant segment expenses regularly provided to the chief operating decision maker, report segment information in interim periods and name the chief operating decision maker's title (Financial Accounting Standards Board [FASB], 2023). Reconciliations of segment totals to consolidated amounts, entity-wide information on products, geographic areas and major customers complete the disclosure. Berger and Hann (2003) found that the move to the management approach led companies to report more segments and revealed information that had been hidden in broader aggregates.
Entity-wide disclosures apply even to a company with a single segment: revenue by product or service group, revenue and long-lived assets for the United States and for foreign countries in total and individually when material, and the existence of any customer providing 10 percent or more of revenue, along with the segment that serves it.
Part B: Interim Reporting Under the Integral Approach
U.S. U.S. rules view a quarter as one slice of the year, so a cost that benefits all twelve months is spread over the four quarters.
1. Annual bonus. Ridgewood expects to pay a $1,200,000 performance bonus in the fourth quarter based on annual results. Each quarter accrues $300,000, rather than charging the full amount in the fourth quarter.
2. Temporary LIFO liquidation. In the second quarter, a supplier delay forced Ridgewood to draw down LIFO inventory layers carrying lower costs, but it expects to replace the inventory by year end. The quarter's cost of goods sold is charged at the expected replacement cost, not the old layer costs, with the difference held as a liability, so the quarter does not report a profit that will reverse.
3. Income taxes. Each quarter's tax expense uses the estimated annual effective rate, here 24%, applied to year-to-date income, with the estimate updated each quarter.
Under IAS 34, international standards treat each interim period more nearly as a discrete period, with exceptions such as income taxes, which also use the estimated annual rate. A bonus would be accrued only if a present obligation exists at the interim date. Brown and Pinello (2007) found that companies managed earnings upward to avoid negative surprises less often at year end than at interim quarters, suggesting that audited annual reporting constrains discretion more than reviewed interim reporting does.
References
Berger, P. G., & Hann, R. (2003). The impact of SFAS No. 131 on information and monitoring. Journal of Accounting Research, 41(2), 163-223. https://doi.org/10.1111/1475-679X.00100
Brown, L. D., & Pinello, A. S. (2007). To what extent does the financial reporting process curb earnings surprise games? Journal of Accounting Research, 45(5), 947-981. https://doi.org/10.1111/j.1475-679X.2007.00256.x
Financial Accounting Standards Board. (2023). Segment reporting (Topic 280): Improvements to reportable segment disclosures (Accounting Standards Update No. 2023-07).
Jeter, D. C., & Chaney, P. K. (2011). Advanced accounting (5th ed.). John Wiley & Sons.
Reading the ACC 6020 Module 8 assignment instructions
Segment and interim reporting make up Written Assignment 8. Expect to identify operating segments, apply the revenue, profit or loss and asset tests, check the 75% external revenue test, list required disclosures and handle interim reporting questions such as the allocation of annual costs, inventory issues, seasonal revenue and income taxes. Jeter and Chaney's edition predates the 2023 segment update, so check whether your instructions include the newer disclosure of significant segment expenses. The problems use fictional data and reuse the invented parent from earlier assignments. Some prompts also ask about entity-wide disclosures by geography and major customer. Expect a table of segment revenues, profits and assets to test against the 10 percent thresholds, plus an interim question on how a cost incurred in one quarter should be spread.
Inside the ACC 6020 Module 8 example
Part A defines an operating segment, lists six segments with their revenue, results and assets in a table and applies the three 10% tests in a second table, with the profit test's greater-of comparison shown. The 75% test follows with external revenue figures, and a disclosure section lists the requirements, including the 2023 additions, with research on the management approach. Part B applies the integral approach to three interim questions, each with a short computation, and contrasts IAS 34, adding research on how annual and interim reporting differ in constraining earnings management. The disclosure is drafted in the form a reader would see in the notes.
ACC 6020 Module 8 rubric: what earns full marks
Segment and interim questions make up one ninth of the written half of ACC-6020. For segment problems, mentors check correct thresholds, especially the profit or loss test's use of the greater of total profits or total losses and absolute values, the 75% test computed on external revenue, and a complete list of required disclosures. For interim problems, they check that annual costs are allocated under the integral approach, that temporary inventory effects are deferred and that taxes use an estimated annual rate. Tables that show each test, and explanations of borderline segments, demonstrate understanding. Showing each test's computation for every segment, rather than only the results, lets a mentor confirm the reportable set. Showing that reportable segments clear the 75 percent external revenue test, with the computation, completes the answer. The significant expense disclosure should follow the newer standard.
ACC 6020 Module 8 help from the desk
Marks go on the 75% test run with total rather than outside revenue, on segment profits compared with net profit instead of the larger of combined profits or combined losses, and on loss-making segments dropped from the profit test. Build one table with all three measures, then apply each test. For interim questions, ask whether the cost benefits the whole year; if it does, spread it. Check whether your course expects the 2023 segment disclosures. A free first sample of your own ACC-6020 Module 8 problems is available on request.
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ACC 6020 Module 8 questions, answered
Where can I find a free ACC 6020 Module 8 sample paper?
The Ridgewood segment and interim assignment is printed above: three 10% tests, the 75% test, required disclosures and three interim reporting questions under the integral approach.
What are the quantitative thresholds for reportable segments?
A segment is reportable if its revenue, the absolute value of its profit or loss, or its assets are at least 10% of the combined amounts, with the profit test based on the greater of total profits or total losses.
What is the 75% test in segment reporting?
The external revenue of reportable segments must be at least 75% of consolidated external revenue; otherwise more segments must be reported.
What did ASU 2023-07 add to segment reporting?
Disclosure of significant segment expenses provided to the chief operating decision maker, interim segment disclosures and the decision maker's title.
What is the integral approach to interim reporting?
Each quarter is read as a slice of the fiscal year, so a cost whose benefit runs all year, a yearly bonus for instance, is spread over the four quarters.