Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments for 2011: What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable?
A) $769,263.
B) $812,000.
C) $854,737.
D) $897,000.
E) $833,368.

Question

Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments for 2011:  What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable?
A) $769,263. 
B) $812,000. 
C) $854,737. 
D) $897,000. 
E) $833,368.

Quizplus · Accepted Answer

According to the "10% Test" under ASC 280, a segment is considered reportable if its revenue, reported profit or loss, or total assets are 10% or more of the combined revenue, reported profit or loss, or total assets of all reported segments. In this case, the combined reported profit is $8,120,000 ($3,022,000 + $3,937,000 + $1,161,000) and 10% of that amount is $812,000. Therefore, each segment must earn at least $812,000 to be considered separately reportable. Choice B is the only answer that meets this requirement.