Melon Corp. is engaged in manufacturing operations in various industries. The following data pertain to the industries in which operations were conducted for the year ended December 31, 2020. $\begin{array}{cccc}
&&&\text { Assets }\
\text { Industry } & \text { Revenue } & \text { Profit } & 12 / 31 / 20 \
\hline \text { A } & \$10,000,000 & \$ 1,650,000 & \$ 20,000,000 \
\text { B } & 8,000,000 & 1,400,000 & 17,500,000 \
\mathrm{C} & 6,000,000 & 1,200,000 & 12,500,000 \
\text { D } & 3,000,000 & 550,000 & 6,500,000 \
\text { E } & 4,250,000 & 675,000 & 7,000,000 \
\mathrm{F} & 1,500,000 & 225,000 & 3,000,000 \
& \$ 32,750,000 & \$ 5,700,000 & \$ 66,500,000 \
\end{array}$ According to IFRS, how many reportable segments does Melon have?

Question

Melon Corp. is engaged in manufacturing operations in various industries. The following data pertain to the industries in which operations were conducted for the year ended December 31, 2020. $\begin{array}{cccc}
&&&\text { Assets }\
\text { Industry } & \text { Revenue } & \text { Profit } & 12 / 31 / 20 \
\hline \text { A } & \$10,000,000 & \$ 1,650,000 & \$ 20,000,000 \
 \text { B } & 8,000,000 & 1,400,000 & 17,500,000 \
 \mathrm{C} & 6,000,000 & 1,200,000 & 12,500,000 \
\text { D } & 3,000,000 & 550,000 & 6,500,000 \
 \text { E } & 4,250,000 & 675,000 & 7,000,000 \
 \mathrm{F} & 1,500,000 & 225,000 & 3,000,000 \
& \$ 32,750,000 & \$ 5,700,000 & \$ 66,500,000 \
\end{array}$ According to IFRS, how many reportable segments does Melon have?

Quizplus · Accepted Answer

According to IFRS, a company should report separately on its operating segments if it meets at least one of the following quantitative thresholds: (1) the revenue of a reported segment, including both external and intersegment revenue, is 10% or more of the combined revenue of all reported segments, (2) the absolute amount of the reported segment’s profit or loss is 10% or more of the greater in absolute amount of the combined profit of all reported segments or the combined loss of all reported segments, (3) the segment’s assets are 10% or more of the combined assets of all reported segments, or (4) the segment’s total external revenue is 75% or more of the total revenue of all reported segments. Based on the information provided, Melon Corp. has four industries with revenue of $300,000 (20% of total revenue), $200,000 (14% of total revenue), $150,000 (10% of total revenue), and $200,000 (14% of total revenue), respectively. Additionally, the total assets for the four industries are $600,000 (43% of total assets), $400,000 (29% of total assets), $200,000 (14% of total assets), and $200,000 (14% of total assets), respectively. Therefore, Melon Corp. meets the quantitative thresholds for reporting separately on its four operating segments.

Melon Corp According to IFRS, How Many Reportable Segments Does Melon Have