Elektronix, Inc. has three operating segments with the following information: What is the minimum amount of assets an operating segment must have to be considered a reportable segment?
A) $1,400,000.
B) $2,500,000.
C) $4,100,000.
D) $5,000,000.
E) $25,000,000.

Question

Elektronix, Inc. has three operating segments with the following information:  What is the minimum amount of assets an operating segment must have to be considered a reportable segment?
A) $1,400,000. 
B) $2,500,000. 
C) $4,100,000. 
D) $5,000,000. 
E) $25,000,000.

Quizplus · Accepted Answer

According to ASC 280, an operating segment is reportable if it meets at least one of the following quantitative thresholds: (1) its revenue is 10% or more of the combined revenue of all operating segments; (2) its profit or loss is 10% or more of the greater of the combined profit of all operating segments or the combined loss of all operating segments; or (3) its assets are 10% or more of the combined assets of all operating segments. In this case, the smallest revenue amount among the three operating segments is $25,000,000 x 8% = $2,000,000. Since assets are typically the smallest of the three criteria, the minimum amount of assets for a segment to be considered reportable is $2,000,000 / 0.10 = $20,000,000. Therefore, the answer is B ($2,500,000 is the closest).