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Correy Corp. and its division are engaged solely in manufacturing operations. The following data (consistent with prior years' data) pertain to the industries in which operations were conducted for the year ended December 31, Year 2: Operating Segment Total Revenue Profit Assets at 12/31/ Yr2 A $10,000,000 $1,750,000 $20,000,000 B 8,000,000 1,400,000 17,500,000 C 6,000,000 1,200,000 12,500,000 D 3,000,000 550,000 7,500,000 E 4,250,000 675,000 7,000,000 F 1,500,000 225,000 3,000,000 $32,750,000 $5,800,000 $67,500,000In its segment information for year 1, how many reportable segments does Correy have?​A. 6B. 5C. 4D. 3

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Answer:

B. 5

Explanation:

For a division to be significant and be a reportable segment, it has to  to pass at least one of the following 10% test:

  1. Revenue is at least 10% or more of the combined segment revenue (including intersegment revenue).
  2. Operating profit (loss) is at least 10% or more of the greater of the absolute combined segment profit or loss.
  3. Identifiable assets are at least 10% or more of the combined segment assets.

​Divisions A, B, C, E pass the revenue test, Division A, B, C, D pass the Operating profit (loss) test and Divisions A, B, C, D, and E pass the Identifiable assets test. since For a division to be significant, it has to  to pass at  least one of the tests, therefore  Divisions A, B, C, D, and E are reportable which is 5.

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