Farr, Inc. is a multidivisional corporation which has both intersegment sales and sales to unaffiliated customers. Farr should report segment financial information for each division meeting which of the following criteria?
A) Segment profit or loss is 10% or more of consolidated profit or loss.
B) Segment profit or loss is 10% or more of combined profit or loss of all company segments.
C) Segment revenue is 10% or more of combined revenue of all the company segments.
D) Segment revenue is 10% or more of consolidated revenue.

Question

Quizplus · Accepted Answer

Farr, Inc. should report segment financial information for each division whose revenue is 10% or more of combined revenue of all the company segments. This is because revenue is a better indicator of segment size than profit or loss, and it reflects the importance of the segment to the overall company performance.

Farr, Inc Is a Multidivisional Corporation Which Has Both Intersegment Sales