Question

Ecru Company has identified five industry segments: plastics, metals, lumber, paper, and finance.

It appropriately consolidated each of these segments in producing its annual financial statements. Information describing each segment (in thousands) follows:

	Plastics				Metals				Lumber				Paper				Finance
Sales to outside parties	$	6,694			$	2,354			$	711			$	422			$	0
Intersegment transfers		148				173				138				150				0
Interest income from outside parties		0				34				21				0				42
Interest income from intersegment loans		0				0				0				0				201
Operating expenses		4,214				1,762				1,066				654				31
Interest expense		76				31				66				28				102
Tangible assets		1,501				3,196				524				771				179
Intangible assets		87				403				0				63				0
Intersegment loans (debt)		0				0				0				0				706

Ecru does not allocate its $1,460,000 in common expenses to the various segments.

Perform testing procedures to determine Ecru’s reportable operating segments.

1. Revenue test:

2. Profit or loss test:

3. Asset test:

Answer 1

ANSWER:

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