The FASB has issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In accordance with Topic 280, Segment Reporting, public entities are required to disclose certain information regarding the operations of reportable segments, such as revenue, profit and loss, and certain expenses such as depreciation and amortization, interest, and income tax expense. Public entities are entities that have issued debt or equity securities or are a conduit bond obligor for conduit debt securities that are traded in a public market, or are required to file financial statements with the Securities and Exchange Commission, or provide financial statements for the purpose of issuing any class of securities in a public market.

The amendments in ASU 2023-07 are intended to improve financial reporting by requiring public entities to disclose incremental segment information on an annual and interim basis to enable investors to develop more decision-useful financial analyses.

Following are the most significant changes included in ASU 2023-07:

• Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss.
• Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of the composition of other segment items. The other segment items category is the difference between reported segment revenue less significant segment expenses and each reported segment profit or loss.
• Requires public entities to provide all annual disclosures about a segment’s profit or loss and assets currently required by Topic 280 in interim periods.
• Clarifies that a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. However, the entity is still required to report at least one segment’s profit or loss that is most consistent with the measurement principles under generally accepted accounting principles.
• Requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
• Requires that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 280.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted.

Public entities should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements. Upon transition, significant expense categories and amounts disclosed in prior periods should be based on the significant expense categories identified and disclosed in the period of adoption.

The full text of ASU 2023-07 can be found here.

Published: 01/03/2024

_{^{Readers should not act upon information presented without individual professional consultation.}}

_{^{Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.}}