Question

Grum Corp., a publicly owned corporation, is subject to the requirements for segment reporting.

In its income statement for the year ending December 31, 2004, Grum reported revenues of $50,000,000, operating expenses of $47,000,000, and net income of $3,000,000. Operating expenses include payroll costs of $15,000,000. Grum's combined identifiable assets of all industry segments at December 31, 2004 were $40,000,000.
In its 2004 financial statements, Grum should disclose major customer data if sales to any single customer amount to at least ______.

a) $300,000 b) $1,500,000 c) $4,000,000 d) $5,000,000

Answer 1

Option (d) $5,000,000

Step-by-step explanation:

Data provided in the question:

Reported revenues = $50,000,000

Operating expenses = $47,000,000

Net income = $3,000,000

Payroll costs included in the operating expenses = $15,000,000

Combined identifiable assets of all industry segments = $40,000,000

Now,

If the revenue derived from sales to any single customer is 10% or more of the revenue of an enterprise then the amount of revenue from each customer shall be disclosed.

Therefore,

Grum should disclose major customer data if

sales to any single customer amount at least = 10% of Reported revenues

= 10% of $50,000,000

= $5,000,000

Option (d) $5,000,000