Question

Unger has the following third party and intersegment revenue for its 10 operating segments Third party revenue $5,000,000 Intersegment revenue $1,000,000 Unger must disclose enough segments so that: a. The sum of the intersegment revenues of the disclosed segments exceeds $3,750,000. b. The sum of the third party revenues of the disclosed segments exceeds $3,750,000 c. The sum of the third party and intersegment revenues of the disclosed segments exceeds $4,500,000 d. The sum of the third party and intersegment revenues of the disclosed segments exceeds $3,750,000 e. The sum of the third party revenues of the disclosed segments exceeds $4,500,000

Answer 1

Unger

Unger must disclose enough segments so that:

b. The sum of the third party revenues of the disclosed segments exceeds $3,750,000

Step-by-step explanation:

a) Data and Calculations:

Sales revenue to third parties = $5,000,000

75% of the consolidated revenues across all operating segments = $3,750,000 ($5,000,000 * 75%)

Intersegment sales revenue = $1,000,000 (this is not included in the 75% test)

b) According to GAAP requirements (75% test), the combined revenues earned by sales to third party customers in the separately reportable operating segments must be at least 75 percent of the total consolidated revenues ($5,000,000 * 75%) across all operating segments, which is equal to $3,750,000.