Summary and Evaluations of FASB Comment Letters Related to My Favorite FASB ASC (Accounting Standards Code)

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Summary And Evaluation of FASB Comment Letters Related to FASB ASC (Accounting Standards Code)
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Introduction
Accounting standards are set rule that guide enterprises in the identification, measuring, recording, interpreting, summarizing and reporting on accounting of entries or the treatment of accounting transaction in the books of accounts. Accounting standards are meant to be commanding standards which give directives on financial reporting and as to such; they are the main source to generally accepted accounting principles commonly known as GAAPs. As mentioned, accounting standards would help in the recognition, measuring, presentation and disclosure of accounting transactions and other related events in the income statements, balance sheet, cash flow statements and other relevant financial statements.
Favorite accounting standard discussed
This paper reviews accounting standards code number 17 (ASC 17) which is about segment reporting. It is also grouped under the international accounting standards (IAS 14) as segment reporting but was later superseded by IFRS 8 on operating segment. It deals with identification, qualification under specific criteria and reporting of segments business activities.
Segment reporting
A segment is an independent business unit that has its own identifiable revenue, assets, liabilities and also costs. A large business tends to subdivide itself into various operating business units or divisions which are independent so as to monitor performance and discontinue operations that are not fruitful. A division will be passes through a series of criteria for assessment as to whether it qualifies to become an operating business segment. A reportable segment will be identified through; the income regularly generated by the segment should account for ten percent or more of the total income of a business, secondly, the segment’s yearly gains or losses should be more or equal to ten percent of total business gains or losses, and lastly, the assets associated with such a segment should be 10% or more than the entire enterprise’s assets. After a segment is identified, it would become independent in reporting its activities.
Summary and Evaluation of FASB comment letters relating to ASC 17 – Segment Reporting
This part will evaluate a one letter under project SEGRPT – 18 segments reporting which was referenced SEGRPT – 18 CFA INSTITUTE/CDPC as affiliation and submitted by Sandra J. Peters. It was done on March 1st year 2006 and was addressed to the financial accounting standards board (FASB) director. The letter sought clarification on the new concept on the approach to segment guidelines. This was in the comment letter referred to as FAS 131. The standards code establishes standards to govern the manner in which public companies make reports regarding operating segments in their annual financial statements given out to business owners. It also suggests reporting of selected information in the interim financial statements advanced to shareholders. The accounting standards code develops further standards to capture major customers, products and services and also geogr...