Operating profits and losses for the 4 industry segments of Brittle Company are asfollows: $$\begin{array} { l r }
\text { Candy } & ( \$ 590,000 ) \
\text { Stix } & \$ 20,000 \
\text { Chips } & \$ 85,000 \
\text { Gum } & \$ 9,000
\end{array}$$ Brittle Company uses IFRS for its external financial reporting. Using only the operating profits (loss) test, which of the segments are reportable?
A) Under IFRS, all four segments must be reported.
B) Stix, Chips, and Gum only.
C) Candy and Chips only.
D) Candy only.

Question

Operating profits and losses for the 4 industry segments of Brittle Company are asfollows: $$\begin{array} { l r } 
\text { Candy } & ( \$ 590,000 ) \
\text { Stix } & \$ 20,000 \
\text { Chips } & \$ 85,000 \
\text { Gum } & \$ 9,000
\end{array}$$ Brittle Company uses IFRS for its external financial reporting. Using only the operating profits (loss) test, which of the segments are reportable?
A) Under IFRS, all four segments must be reported.
B) Stix, Chips, and Gum only.
C) Candy and Chips only.
D) Candy only.

Quizplus · Accepted Answer

Under IFRS, a segment is reportable if it meets any of the quantitative thresholds, one of which is that its reported profit or loss is 10% or more of the combined profit or loss of all segments that did not report a loss, or 10% or more of the combined loss of all segments that reported a loss. Here, Candy's loss is significantly larger than any other segment's performance, making it a clear candidate for reporting due to its substantial impact on the company's financials. Chips, with a profit of $85,000, also meets the criteria for reporting due to its relative size compared to the total operating profits and losses. Stix and Gum, although profitable, do not meet the threshold for size relative to the total profits and losses of the company.

Operating Profits and Losses for the 4 Industry Segments of Brittle