Segmentbericht[^26^]https: welt der bwl.de konzernabschluss

What Is Segmentbericht?

Ein Segmentbericht, or Segment Reporting, is a crucial aspect of Financial Reporting that involves disclosing financial information about a company's distinct operating segments. This practice falls under the broader category of Accounting Standards and aims to provide stakeholders with a more granular understanding of a diversified entity's performance, risks, and opportunities.⁵⁰, ⁵¹ Instead of presenting only consolidated financial data, Segmentbericht breaks down a company's operations into manageable components, such as different product lines, services, or geographical areas.⁴⁹ This increased Transparency allows investors, analysts, and management to gain deeper insights into the underlying drivers of a company's overall financial health and future prospects.⁴⁸

History and Origin

The need for Segmentbericht emerged as businesses grew in complexity and diversified across various industries and geographic regions. Early attempts at requiring such disclosures in the United States began with the Statement of Financial Accounting Standards No. 14 (SFAS 14), "Financial Reporting for Segments of a Business Enterprise," issued by the Financial Accounting Standards Board (FASB) in 1976. This standard aimed to assist users in analyzing a corporation's cash flows and performance by providing information about its major segments.⁴⁶, ⁴⁷

However, SFAS 14 faced criticism from the U.S. Securities and Exchange Commission (SEC) and security analysts for providing insufficient segment information.⁴⁴, ⁴⁵ In response to these concerns and following a convergence project with the International Accounting Standards Board (IASB), the FASB issued SFAS 131 in 1997, which later became codified as ASC 280.⁴², ⁴³ Concurrently, the IASB developed its own standards, with International Accounting Standard 14 (IAS 14) being superseded by IFRS 8 in 2006, effective from January 1, 2009.⁴⁰, ⁴¹ Both ASC 280 and IFRS 8 adopt a "management approach," requiring companies to report segments based on how management internally organizes and evaluates its business, providing financial statements users with a "view through the eyes of management."³⁸, ³⁹

Key Takeaways

• Segmentbericht disaggregates a company's financial data into distinct Business Segments or geographic areas.
• Its primary goal is to enhance financial transparency, allowing stakeholders to assess the performance, risks, and opportunities of different parts of a diversified entity.
• Major accounting standards governing Segmentbericht are IFRS 8 (International Financial Reporting Standards) and ASC 280 (US GAAP).
• Companies identify reportable segments based on quantitative thresholds related to revenue, profit/loss, or assets, as well as qualitative factors.
• The disclosures help investors make more informed decisions by providing insights not always evident from consolidated financial statements alone.

Formula and Calculation

Segmentbericht does not involve a single overarching formula but rather relies on established quantitative thresholds to determine which operating segments are "reportable." Under both U.S. GAAP (ASC 280) and IFRS (IFRS 8), an operating segment must be reported if it meets any of the following criteria:

• Revenue Test: The segment's total revenue (including both external sales and intersegment sales) is 10% or more of the combined total revenue of all operating segments.³⁶, ³⁷
• Profit or Loss Test: The absolute amount of the segment's reported profit or loss is 10% or more of the greater, in absolute amount, of (a) the combined reported profit of all operating segments that did not report a loss, or (b) the combined reported loss of all operating segments that reported a loss.³⁴, ³⁵
• Asset Test: The segment's assets are 10% or more of the combined assets of all operating segments.³², ³³

Additionally, a company must ensure that the total external revenue reported by all disclosed segments constitutes at least 75% of the entity's consolidated revenue. If this threshold is not met, additional segments must be reported, even if they do not individually meet the 10% criteria, until the 75% threshold is reached.³⁰, ³¹

Interpreting the Segmentbericht

Interpreting Segmentbericht requires understanding that the information presented reflects a company's internal Management Approach to assessing its operations. The reported segment profit or loss and assets are often measured on the same basis used by the Chief Operating Decision Maker (CODM) for internal resource allocation and Performance Measurement.²⁹

Users should focus on several aspects:

• Segment Profitability: Comparing the Profitability Analysis of different segments can reveal which parts of the business are generating the most income and which may be underperforming.
• Revenue Contribution: Analyzing the Revenue Recognition from external customers for each segment helps understand the primary sources of a company's sales.
• Asset Allocation: Observing how assets are distributed across segments provides insight into where the company is investing its resources and the capital intensity of different operations.
• Geographic and Product Diversification: Segmentbericht often highlights a company's exposure to different markets or product cycles through Geographic Segments and product-based reporting.²⁷, ²⁸

Understanding the basis of measurement and allocation policies for intersegment transactions and common costs is also critical, as these can influence reported segment results.

Hypothetical Example

Consider "Global Innovations Inc.," a hypothetical diversified technology company that reports three main operating segments:

• Software Solutions: Develops and sells enterprise software.
• Hardware Manufacturing: Produces consumer electronics.
• Cloud Services: Provides data storage and computing services.

For its latest annual report, Global Innovations Inc. determines its reportable segments using the quantitative thresholds.

Applying the 10% Tests:

• Total Revenue of all Operating Segments = $1,500M. 10% threshold = $150M.
  • Software Solutions ($800M) > $150M (Reportable)
  • Hardware Manufacturing ($350M) > $150M (Reportable)
  • Cloud Services ($250M) > $150M (Reportable)
• Combined Profit of profitable segments = $150M + $70M + $10M = $230M.
• Combined Loss of unprofitable segments = $50M.
• Greater of absolute profit/loss = $230M. 10% threshold = $23M.
  • Software Solutions ($150M profit) > $23M (Reportable)
  • Hardware Manufacturing ($50M loss) > $23M (Reportable)
  • Cloud Services ($70M profit) > $23M (Reportable)
• Total Assets of all Operating Segments = $1,150M. 10% threshold = $115M.
  • Software Solutions ($600M) > $115M (Reportable)
  • Hardware Manufacturing ($300M) > $115M (Reportable)
  • Cloud Services ($200M) > $115M (Reportable)

All three major segments meet all three 10% quantitative thresholds, making them reportable.
Next, Global Innovations Inc. checks the 75% revenue threshold for its reportable segments (assuming all revenue from 'Other Segments' is external).
Total external revenue of reportable segments = $800M (Software) + $350M (Hardware) + $250M (Cloud) = $1,400M.
Consolidated external revenue = $1,500M.
$1,400M / $1,500M = 93.33%. Since 93.33% is greater than 75%, no additional segments need to be reported.

Global Innovations Inc. would thus provide detailed financial disclosures for its Software Solutions, Hardware Manufacturing, and Cloud Services segments. This helps Investor Relations by showing how each major part of the company contributes to the whole.

Practical Applications

Segmentbericht plays a vital role in several areas of finance and investment analysis:

• Investment Analysis: Investors and financial analysts use segment information to evaluate the performance, risks, and growth opportunities of different business units within a diversified company. This allows for a more nuanced assessment than relying solely on overall consolidated figures.²⁵, ²⁶
• Resource Allocation: Corporate management utilizes Segmentbericht to make informed decisions about allocating capital and operational resources to various parts of the business. By identifying high-performing segments or those requiring intervention, companies can optimize their strategic investments.²⁴
• Regulatory Compliance: Publicly traded companies are mandated by regulatory bodies to provide segment disclosures to ensure transparency and comparability in financial markets. In the US, the SEC enforces compliance with ASC 280,²³ while globally, many companies adhere to IFRS 8.²²
• Mergers and Acquisitions (M&A): During M&A activities, Segmentbericht provides critical insights into the target company's distinct business lines, helping potential acquirers to identify valuable assets and assess integration challenges.
• Credit Analysis: Lenders and creditors rely on segment information to evaluate a company's ability to service debt by understanding the financial strength and cash flow generation of its individual operating units.

The Financial Accounting Standards Board (FASB) regularly updates its guidance, with recent improvements in ASC 280 issued in November 2023, requiring enhanced disclosures about significant segment expenses.²⁰, ²¹

Limitations and Criticisms

Despite its benefits, Segmentbericht has several limitations and has faced criticism:

• Management Discretion: A significant critique stems from the "management approach" adopted by IFRS 8 and ASC 280. This approach allows considerable discretion in defining operating segments and allocating common costs and assets, which can lead to a lack of comparability across different companies or even over time for the same company.¹⁸, ¹⁹ What a CODM considers relevant for internal reporting may not always align perfectly with what external users need for valuation purposes.¹⁷
• Insufficient Detail: Critics argue that the disclosed information,¹, ²[³](https://www.accountingtools.com/articles/what-is-segment-repo[¹⁵](https://efmaefm.org/0efmameetings/efma%20annual%20meetings/2018-Milan/papers/EFMA2018_0487_fullpaper.pdf), ¹⁶rting.html), ⁴⁵, ⁶⁷, ^89101112