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FASB ASC 280IMA / ICMAcmaVerified 2026-11-12

FASB ASC 280: Segment Reporting: Applying ASC 280 for Strategic Analysis

Authoritative Rule Summary (FASB ASC 280)

Under FASB ASC 280 (IMA / ICMA), segment Reporting: Applying ASC 280 for Strategic Analysis establishes the authoritative rules tested on the IMA CMA. Master ASC 280 segment reporting, from the management approach and quantitative thresholds to the 75% test. VoraPrep verifies every threshold, worked table, and practice question below against the current IMA CMA blueprint.

Worked Example: Identifying Segments at Global Tech Inc.

SegmentExternal RevenueIntersegment RevenueTotal RevenueProfit (Loss)Segment Assets
Software$800$50$850$150$1,200
Hardware$400$20$420$40$900
Cloud$300$0$300($70)$1,500
Consulting$150$10$160$20$300
Data Analytics$80$0$80$10$250
Totals$1,730$80$1,810$150$4,150
Test Yourself on FASB ASC 280 in 30 Seconds (No Login)IMA CMA · easy

Innovatech Corp. is evaluating the performance of its two main divisions. The Consumer Electronics division generated revenues of $10,000,000 and an operating profit of $2,000,000. The Home Appliances division generated revenues of $5,000,000 and an operating profit of $1,500,000. A manager needs to determine which division is more efficient at converting revenue into profit. Which of the following statements is correct?

Worked Practitioner Scenario

Worked Example: Identifying Segments at Global Tech Inc.

Scenario. Global Tech Inc.'s CODM reviews data for five operating segments. Your task is to determine which are reportable.

  1. Segment Data (in millions):
  2. | Segment | External Revenue | Intersegment Revenue | Total Revenue | Profit (Loss) | Segment Assets | |:---|:---|:---|:---|:---|:---| | Software | $800 | $50 | $850 | $150 | $1,200 | | Hardware | $400 | $20 | $420 | $40 | $900 | | Cloud | $300 | $0 | $300 | ($70) | $1,500 | | Consulting | $150 | $10 | $160 | $20 | $300 | | Data Analytics | $80 | $0 | $80 | $10 | $250 | | Totals | $1,730 | $80 | $1,810 | $150 | $4,150 |
  3. Step 1: Apply the 10% Tests to Find Reportable Segments Revenue Test: The benchmark is 10% of total revenue ($1,810M) = $181M. Pass: Software ($850M), Hardware ($420M), Cloud ($300M). Profit/Loss Test: First, find the benchmark. Sum of profits: $150M + $40M + $20M + $10M = $220M Sum of losses (absolute): |-$70M| = $70M The greater absolute amount is $220M. The benchmark is 10% of $220M = $22M. Pass: Software ($150M), Hardware ($40M), Cloud (|$70M|). Asset Test: The benchmark is 10% of total assets ($4,150M) = $415M. Pass:* Software ($1,200M), Hardware ($900M), Cloud ($1,500M).
  4. Conclusion: Software, Hardware, and Cloud are reportable because each meets at least one 10% test.
Common wrong answer. If you picked an answer that also included the Consulting segment as reportable, you likely made a common error in the profit/loss test. It's tempting to calculate the 10% benchmark by simply netting all profits and losses together, arriving at the total company profit of $150 million. This would yield a lower threshold of $15 million, which the Consulting segment's $20 million profit would then exceed, making it appear reportable. However, this netting approach is incorrect. ASC 280 requires a specific, two-step process for this test. You must separately sum all the profits and, in a separate calculation, sum the absolute values of all the losses. The benchmark is then 10% of whichever of these two totals is larger. In this case, the $220 million sum of profits was the correct base, not the $150 million net profit. Always remember to use the greater of the absolute sum of profits or the absolute sum of losses for the profit/loss test.
Exam Watchouts & Statutory Boundaries

Common IMA CMA Distractors on FASB ASC 280

  • 1Remembering the three quantitative thresholds is easy with the R-P-A mnemonic:
  • 2Revenue (10% of total segment revenue)
  • 3Profit/Loss (10% of the greater of total profits or total losses)
  • 4Assets (10% of total segment assets)
  • 5If a segment passes any one of the R-P-A tests, it's a candidate for separate reporting. Don't forget the final 75% external revenue check!

Frequently Asked Questions: FASB ASC 280

What is the core rule under FASB ASC 280 (Segment Reporting: Applying ASC 280 for Strategic Analysis)?

Under FASB ASC 280 (IMA / ICMA), segment Reporting: Applying ASC 280 for Strategic Analysis establishes the authoritative rules tested on the IMA CMA. Master ASC 280 segment reporting, from the management approach and quantitative thresholds to the 75% test. VoraPrep verifies every threshold, worked table, and practice question below against the current IMA CMA blueprint.

How is FASB ASC 280 tested on the IMA CMA?

Remembering the three quantitative thresholds is easy with the R-P-A mnemonic: Revenue (10% of total segment revenue)

Where can I practice IMA CMA questions on Segment Reporting: Applying ASC 280 for Strategic Analysis?

Test yourself instantly with the free playable IMA CMA question on this page, or launch VoraPrep's full IMA CMA adaptive question bank, interactive lessons, and 1:1 exam simulator at voraprep.com/cma.

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