Question

Marigold Corp. and its divisions are engaged solely in manufacturing operations. The following data pertain to the segments in which operations were conducted for the year ended December 31, 2018.

						Assets
Industry		Revenue		Profit		12/31/18
A		$ 8010000		$1315000		$15920000
B		6740000		1122000		13840000
C		5010000		960000		10110000
D		2300000		440000		5210000
E		3320000		539000		5680000
F		1200000		180000		2410000
		$26580000		$4556000		$53170000

In its segment information for 2018, how many reportable segments does Marigold have?

A.

Three

B.

Four

C.

Five

D.

Six

Answer 1

Solution

Marigold Corp

Answer - B. Four

Computations and Explanations:

A segment is considered reportable segment, if its revenues are at least 10% of combined revenues, 10% of the profit or loss or 10% of the combined assets of the entity. One of the three criteria are to be satisfied for a segment to be regarded as reportable segment.

Marigold Corp		(percentage to total)
Segments	Revenue	Profits	Assets	Reportable Segment
A	30.13%	28.86%	30%	Yes
B	25.36%	24.63%	26.00%	Yes
C	18.85%	21.10%	19%	Yes
D	8.65%	9.66%	9.80%	No
E	12.50%	11.83%	10.68%	Yes
F	4.50%	3.95%	4.53%	No

The number of reportable segments for Marigold Corporation = 4

The segments A, B, C and E have revenues, profits and assets equal to or more than the respective aggregates. Hence, these segments are categorized as reportable segments.

The revenues, profits and assets of the segments, D and F are less than their respective aggregates. Hence, these segments are not considered reportable segments.

The percentages to totals are computed as follows,

For instance, revenue percentage of segment D = (2,300,000/26,580,000) x 100 = 8.65

For instance, profit percentage of segment A = (1,315,000/4,556,000) x 100 = 28.86%

For instance, assets percentage of segment C = (10,110,000/53,170,000) x 100 = 19%