It is possible for segments to qualify as reportable, but not represent a material portion of the enterprise.What test is applied to ensure the segments reported represent a significant portion of enterprise activity?
A)Combined external segment revenues for reportable segments exceed 75% of internal and external segment revenues.
B)Total internal and external segment revenue exceeds 75% of total consolidated revenue.
C)Total external segment revenue of the reportable segments exceeds 75% of consolidated revenue.
D)Total segment assets of the reportable segments exceeds 75% of total consolidated assets.

Question

It is possible for segments to qualify as reportable, but not represent a material portion of the enterprise.What test is applied to ensure the segments reported represent a significant portion of enterprise activity?
A)​Combined external segment revenues for reportable segments exceed 75% of internal and external segment revenues.
B)​Total internal and external segment revenue exceeds 75% of total consolidated revenue.
C)​Total external segment revenue of the reportable segments exceeds 75% of consolidated revenue.
D)​Total segment assets of the reportable segments exceeds 75% of total consolidated assets.

Quizplus · Accepted Answer

The correct answer is C because the test applied to ensure the segments reported represent a significant portion of enterprise activity is that the total external segment revenue of the reportable segments must exceed 75% of consolidated revenue. This criterion is used to ensure that the segments disclosed in financial reports provide a meaningful picture of the company's operations to the users of financial statements.

It Is Possible for Segments to Qualify as Reportable, but Not