Question

From the following information, decide how many segments would be reported to satisfy the appropriate tests of segmented reporting:

SEG	UNAFFIATED REV	TOTAL REV	OPERATING PROFIT/LOSS	SEGMENT ASSETS
A	$90	$280	$120	$70
B	$80	$100	$10	$350
C	$10	$60	$ (5)	$90
D	$330	$350	$0	$240
E	$300	$400	$ (100)	$230
F	$300	$380	$160	$560
TOTAL	$1,110	$1,570	$185	$1,540

REVENUE TEST-

OPERATING PROFIT/LOSS-

SEGMENT ASSETS-

REPORTABLE SEGMENTS-

Does the above selected assets meet eh 75% test?

Answer 1

It should be noted that in order to qualify as reporting segment, segment should qualify any of the following Test :-

1 .Revenue test - it should have 10% or more of total revenue

2. Operating profit/loss - it should have earned oroincurred at least 10% of profit or loss of total profit or loss whichever is greater

3. Asses - it should consist of 10% of total assets of the company

Further all reportable segments should represent at least 75% of unaffiliated revenue.

Following table shows the determination of reportable segments

Segments	unaffiliated revenue	total revenue	operating profit/(loss)	Segment asset	per entage of total revenue	per entage of op. Profit	per entage of asset	reportable or not
A	90	280	120	70	17.83%(280/1570x100)	41.38% (120/290x100)	4.55% (70/1540	reportable
B	80	100	10	350	6.37% (100/1570)x100	3.45% (10/290x100)	22.73% 350/1540x100)	reportable
C	10	60	(5)	90	3.82% (60/1570x100)	1.72% (5/290x100)	5.84% (90/1540x100)	not reportable
D	330	350	0	240	22.29%(350/1570x100)	0	15.58% (240/1540x100)	reportable
E	300	400	(100)	230	25.48% (400/1570x100)	34.48% (100/290x100)	14.94% (230/1540x100)	reportable
F	300	380	160	560	24.20% (380/1570x100)	55.17% (160/290x100)	36.36% (560/1540x100)	reportable
TOTAL	1110	1570	290 (Total of profit or loss whichever more i.e.290 or 105(loss), whichever greater	1540

So reportable segments are A, B, D, E, F

Total unaffiliated revenue of reportavle segments are 1100, which is more than 75% revenue hance these are reportable segments.