Question

E24-3 (Segmented Reporting) Carlton Company is involved in four separate industries. The following information is available for each of the four industries.

Operating Segment Total Revenue Operating Profit (Loss) Identifiable Assets
W $60,000 $15,000 $167,000
X 10,000 3,000 83,000
Y 23,000 (2,000) 21,000
Z 9,000 1,000 19,000
$102,000 $17,000 $290,000
Instructions:
Determine which of the operating segments are reportable based on the:
(a) Revenue test.
(b) Operating profit (loss) test.
(c) Identifiable assets test.

Answer 1

Answer:

(a) Revenue test.

Only report segments that generate at least 10% of total revenues:

• W
• X
• Y

(b) Operating profit (loss) test.

Only report segments that generate at least 10% of profits or losses:

• W
• X
• Y

(c) Identifiable assets test.

Only report segments that account for at least 10% of combined assets:

• W
• X

Explanation:

Operating               Total                 Operating              Identifiable  

segment                 revenue            profit (loss)             assets

W                            $60,000             $15,000               $167,000

X                             $10,000               $3,000                $83,000

Y                             $23,000             ($2,000)               $21,000

Z                               $9,000                $1,000                $19,000

                             $102,000             $17,000              $290,000

10%                         $10,200                $1,700                $29,000