Segment Reporting.Baden Company is a diversified company which has developed the following information about its five segments:
InstructionsIdentify which segments are significant enough to warrant disclosure in accordance with FASB No. 131, "Reporting Disaggregated Information about a Business Enterprise," by applying the following quantitative tests:
a. Revenue test
b. Operating profit or loss test
c. Identifiable assets test

Question

Segment Reporting.Baden Company is a diversified company which has developed the following information about its five segments:  
InstructionsIdentify which segments are significant enough to warrant disclosure in accordance with FASB No. 131, "Reporting Disaggregated Information about a Business Enterprise," by applying the following quantitative tests: 
a. Revenue test
b. Operating profit or loss test
c. Identifiable assets test

Quizplus · Accepted Answer

The Answer is a. Revenue test - a segment is reportable if its total sales are $370,000 or more
(10% × $3,700,000). Segments A, B, and E satisfy the revenue test.
b. Operating profit or loss test - a segment's absolute profit or loss must be $58,000 or more [10% of the absolute greater of $520,000 or ($580,000)]. Segments A, B, and D satisfy the operating profit or loss test.
c. Identifiable assets test - a segment's identifiable assets must be $1,910,000 or more (10% × $19,100,000). Segments B, D, and E satisfy the identifiable test.
Segments A, B, D, and E are identified as significant and therefore reportable because they passed at least one of the significance tests.