Consider the following list of operating segments and segment results for the current reporting period relating to Legolas Ltd,and answer the question below. What is the minimum loss (rounded to the nearest $1,000)that the Publishing segment could have made for that segment to be considered a reportable segment according to AASB 8?
A) ($39,000)
B) ($114,000)
C) ($103,000)
D) ($142,000)
E) None of the given answers.

Question

Consider the following list of operating segments and segment results for the current reporting period relating to Legolas Ltd,and answer the question below.  What is the minimum loss (rounded to the nearest $1,000)that the Publishing segment could have made for that segment to be considered a reportable segment according to AASB 8?
A) ($39,000) 
B) ($114,000) 
C) ($103,000) 
D) ($142,000) 
E) None of the given answers.

Quizplus · Accepted Answer

According to AASB 8, a segment is reportable if it meets either of the following conditions:
1) The segment's revenue (external and internal) is 10% or more of the combined revenue of all operating segments, OR
2) The segment's result (profit or loss) is 10% or more of the higher of the combined profit of all operating segments or the combined loss of all operating segments.
In this case, the total combined revenue of all segments is $2,500,000. Therefore, the Publishing segment's revenue is $250,000 (10% of $2,500,000). To be a reportable segment, the Publishing segment's result has to be $250,000 or more (10% of the higher of combined profit or loss of all segments).
The combined profit of all segments is $110,000, and the combined loss of all segments is ($383,000). Therefore, the higher of the two is $383,000. 10% of $383,000 is $38,300. To meet the condition for a reportable segment, the Publishing segment's result must be $38,300 or more.
The segment result for the Publishing segment is ($75,000). To find the minimum loss for the Publishing segment to be a reportable segment, we need to add $75,000 to $38,300. That gives us $113,300. Rounded to the nearest $1,000, the answer is ($114,000), which is option B.

Consider the Following List of Operating Segments and Segment Results