Ansfield, Inc.has several potentially reportable segments.The following financial information has been determined for the current fiscal year: ?

$$\begin{array} { l r }
\text { Consolidated net income } & \$ 1,000,000 \
\text { Operating income before taxes } & 1,500,000 \
\text { Net operating income of all segments } & 1,350,000 \
\text { Total consolidated revenue } & 8,000,000 \
\text { Total revenue of all segments, } & \
\text { excluding intersegment sales } & 7,000,000 \
\text { Total intersegment sales } & 1,200,000 \
\text { Consolidated total assets } & 50,000,000 \
\text { Total assets of all segments } & 45,000,000
\end{array}$$ The minimum amount of revenues a segment must have to qualify as reportable is ____.
A)$700,000
B)$800,000
C)$820,000
D)The answer cannot be determined from the information given.

Question

Ansfield, Inc.has several potentially reportable segments.The following financial information has been determined for the current fiscal year: ?

$$\begin{array} { l r } 
\text { Consolidated net income } & \$ 1,000,000 \
\text { Operating income before taxes } & 1,500,000 \
\text { Net operating income of all segments } & 1,350,000 \
\text { Total consolidated revenue } & 8,000,000 \
\text { Total revenue of all segments, } & \
\text { excluding intersegment sales } & 7,000,000 \
\text { Total intersegment sales } & 1,200,000 \
\text { Consolidated total assets } & 50,000,000 \
\text { Total assets of all segments } & 45,000,000
\end{array}$$ The minimum amount of revenues a segment must have to qualify as reportable is ____.
A)$700,000
B)$800,000
C)$820,000
D)The answer cannot be determined from the information given.

Quizplus · Accepted Answer

The minimum amount of revenues a segment must have to qualify as reportable is not provided, so we must look for other clues. According to Accounting Standards, a segment is considered reportable if it meets any one of the three quantitative criteria: (1) its revenue is 10% or more of the combined revenue of all segments, (2) its profit or loss is 10% or more of the greater of the combined profit of all segments and the combined loss of all segments, or (3) its assets are 10% or more of the combined assets of all segments. Since we only have information about revenues and not profit or assets, we can assume that the minimum amount of revenues a segment must have to qualify as reportable is 10% of Ansfield, Inc.'s total revenues, which is $8,200,000 (10% of $82,000,000). Therefore, the answer is C) $820,000.

Ansfield, Inc The Minimum Amount of Revenues a Segment Must Have to Been