Natarajan, Inc. had the following operating segments, with the indicated amounts of segment revenues and segment expenses: According to the profit or loss test, which segments would require disaggregation?
A) A, B, D, and E.
B) A, B, C, and E.
C) A, B, and D.
D) A and D.
E) A only.

Question

Natarajan, Inc. had the following operating segments, with the indicated amounts of segment revenues and segment expenses:  According to the profit or loss test, which segments would require disaggregation?
A) A, B, D, and E. 
B) A, B, C, and E. 
C) A, B, and D. 
D) A and D. 
E) A only.

Quizplus · Accepted Answer

According to the profit or loss test, segments that have reported revenues, including any intersegment revenues, that are 10 percent or more of the combined revenues of all operating segments need to be disaggregated. In this case, segments A, B, C, and E all meet this threshold, and thus require disaggregation. Segment D, however, does not meet the threshold and does not require disaggregation. Therefore, the best choice is B which includes all segments that require disaggregation.