How to Determine Reportable Segments

In determining whether a company should report the results of an operating segment, first determine whether any operating segments should be combined (segments that perform the same business activities in the same economic environment should be combined).
Second, apply the (1) revenue test, (2) profit or loss test, and (3) asset test. If any one of these three tests is met, the operating segment should be reported.
According to the revenue test, a segment should be reported if the segment's revenues are at least 10% of revenues from all segments combined.
According to the profit or loss test, a segment should be reported if the absolute value of its profit or loss is at least 10% of the larger of (a) the combined profit of all profitable segments and (b) the combined losses of all segments that posted a loss.
According to the asset test, the segment should be reported if the segment's assets are at least 10% of the combined assets of all segments.
The results of any unreported segments should be reported in an "All Other" category.
If the combined revenues of all reportable segments do not comprise at least 75% of the company's sales to external customers, then the company should report additional segments until this threshold is met.
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[@86ifyfarooq]

In the last chart, the reportable segment should be 'Cloud based services' instead of 'Smartwatches' right? Because 'Smartwatches' didn't pass the test. I guess that's a mistake there? I hope I'm not misunderstanding it.

[@nityabardhan5550]

@farooq abbasi, exactly what I pointed out. It seems like some mistake.

[@elenh.1524]

Thank you for the explanation!

[@brightmind5345]

okay. what I understood that we should first perform10% test to classify all reportable segments in terms of consolidating and external sales combined. but this is not enough yet, we should further go for the external revenue alone. and test whether if these segments which classified as reportable segments during the 10% test represent 75% of the external revenue. if >= 75% proceed. if < 75% then classify another segment in order to reach a capacity of 75%. it is a confusing thing but it seems like that?

[@notyouraveragenegro]

great video

[@bappadittyasaha4506]

Thanks