Question

rock Co. had the following revenues and expenses that occurred relating to their operating segments during the year: Sales to unaffiliated customers $ 2,000,000 Intersegment sales of products $ 500,000 Interest earned on loans to other segments $ 50,000 Gain or loss on discontinued operations $ 70,000 In order to pass the revenue test for qualifying as a reportable segment, a segment’s revenue must exceed

Answer 1

The question is missing the options given below:

A.$255,000 B.$262,000 C.$250,000 D.$200,000

Option C, a segment's revenue must exceed $250,000

Step-by-step explanation:

In order to pass the revenue test for qualifying as a reportable segment,a segment 's revenue must exceed 10% of the entity's combined revenue.

The combined revenue is calculated thus:

$

Sales to unaffiliated customers 2000,000.00

Intersegment sales 500,000.00

Total sales 2,500,000.00

10% threshold 250,000.00

As a result for any segment to pass the reportable segment test,its revenue must exceed $250,000.00 as stipulated by international accounting best practices such as the U.S GAAP and other international standards.