Question

Mason Company has prepared consolidated financial statements for the current year and is now gathering information in connection with the following five operating segments it has identified.

	Company Total				Books				Computers				Maps				Travel				Finance
Sales to outside parties	$	1,755			$	196			$	763			$	449			$	347			$	0
Intersegment sales		575				46				295				61				173				0
Interest income—external		141				82				0				0				0				59
Interest income—intersegment loans		169				0				0				0				0				169
Assets		3,760				261				1,488				303				358				1,350
Operating expenses		1,567				137				873				290				212				55
Expenses—intersegment sales		276				92				73				43				68				0
Interest expense—external		129				0				0				0				0				129
Interest expense—intersegment loans		235				43				93				60				39				0
Income tax expense (savings)		153				67				(19	)			82				86				(63	)
General corporate expenses		110
Unallocated operating costs		135

Determine the reportable segments by performing each applicable test. (Figures are in thousands.)

A. Revenue test:

B. Profit or loss test:

C. Asset test:

Answer 1

A. Revenue test:

In the revenue step we will calculate the % of individual Segment revenue. Please find the below calculation

Particular	Revenue in $	percentage (%)
Books (196+46+82)	324	12.3%	Reportable
Computer ` (763+295)	1058	40.1%	Repotable
Maps (449+61)	510	19.3%	Repotable
Travel (347+173)	520	19.7%	Repotable
Finance (59+169)	228	8.6%
Total	2640	100.0%

All segment which has more then 10% revenue are reportable segment

__________________________________________________

B. Profit or loss test:

	Revenue in $	Expanses	Profit/Loss
	A	B	C=A-B
Books	324	339	-15
Computer `	1058	1020	38	Reportable
Maps	510	475	35	Reportable
Travel	520	405	115	Reportable
Finance	228	121	107	Reportable
Total	2640	2360	280

Here we also considered that segment which generate more than 10% of total profit will be reported

=10% of total profit 280

=10 %x 280

=280

So segment which has $28 or more revenue is reportable

________________________________________________

C. Asset test:

	Assets in $	percentage (%)
	A	B
Books	261	6.9%
Computer `	1,488	39.6%	Reportable
Maps	303	8.1%
Travel	358	9.5%
Finance	1,350	35.9%	Reportable
Total	3760	100.0%

Here we also considered that segment which has more than 10% of total assets will be reported