Question

Cott Co.'s four business segments have revenues and identifiable assets expressed as percentages of Cott's total revenues and total assets as follows: Revenues Ebon 64 Fair 14 Gel 14 Hak 8 100. Which of these business segments are deemed to be reportable segments?

1) Ebon
2) Fair
3) Gel
4) Hak

Answer 1

Reportable segments are determined using certain thresholds such as the 10% rule of revenues or assets. Ebon, Fair, and Gel meet these criteria and are deemed reportable segments, while Hak does not meet the 10% rule for revenues.The correct answers are 1), 2) and 3)

Step-by-step explanation:

The question asks which of Cott Co.'s business segments are deemed to be reportable segments. In general, under accounting standards like the International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP), a business segment is considered reportable if it meets certain quantitative thresholds. These typically include generating a significant portion of the company's revenues, assets, or profits.

In this case, if we use the 10% rule common in such standards, any segment with revenues or assets surpassing 10% of the total would be reportable. Here, the Ebon segment, which has 64% of revenues, clearly exceeds this threshold. Likewise, Fair and Gel, each with 14% of revenues, also surpass the 10% mark and are therefore reportable.

Hak, with 8% of revenues, does not meet the 10% threshold and is not considered a reportable segment unless it meets other criteria such as having a significant impact on the company's operations or profitability.