Kaycee Corporation's revenues for the year ended December 31, 2017, were as follows: Consolidated Revenue per the Income Statement: $1,200,000
Division 1 Intersegment Sales: $180,000
Division 2 Intersegment Sales: $60,000
For purposes of the Revenue Test, what amount will be used as the benchmark for determining whether a segment is reportable?
A) $ 24,000.
B) $120,000.
C) $138,000.
D) $144,000.
E) $ 0.

Question

Quizplus · Accepted Answer

The benchmark for determining whether a segment is reportable is 10% of the combined revenue, which includes both external and intersegment sales. The total revenue is $1,200,000 + $180,000 + $60,000 = $1,440,000. Therefore, 10% of $1,440,000 is $144,000.

Kaycee Corporation's Revenues for the Year Ended December 31, 2017