Question

Marigold Corp. and its divisions are engaged solely in manufacturing operations. The following data pertain to the segments in which operations were conducted for the year ended December 31, 2021.

Assets
Industry Revenue Profit 12/31/21
A $8010000 $1315000 $15920000
B 6740000 1122000 13840000
C 5010000 960000 10110000
D 2300000 440000 52100

In its segment information for 2018, how many reportable segments does Marigold have?
a. Three
b. Four
c. Five
d. Six

Answer 1

Answer: b. Four

Step-by-step explanation:

A reportable segment needs to satisfy at least one of the following criteria:

• Its revenues need to be 10% or more of total revenue.
• Its profit or less has to be 10% or more of total profit or loss
• Its assets have to be 10% or more of total combined assets

Total revenue:

= 8,010,000 + 6,740,000 + 5,010,000 + 2,300,000

= $22,060,000

Total profit:

= 1,315,000 + 1,122,000 + 960,000 + 440,000

= $3,837,000

Total assets

= 15,920,000 + 13,840,000 + 10,110,000 + 5,210,000

= $45,080,000

Industry A proportion of total revenue:

= 8,010,000 / 22,060,000

= 36.3%

Qualifies as reportable segment

Industry B proportion of total revenue:

= 6,740,000 / 22,060,000

= 31%

Qualifies as reportable segment

Industry C proportion of total revenue:

= 5,010,000 / 22,060,000

= 23%

Qualifies as reportable segment

Industry D proportion of total revenue:

= 2,300,000 / 22,060,000

= 10.4%

Qualifies as reportable segment