Question

Sage Company is involved in four separate industries. The following information is available for each of the four industries. Operating Segment Total Revenue Operating Profit (Loss) Identifiable Assets W $55,796 $15,220 $182,990 X 9,610 2,410 91,495 Y 24,050 (3,020) 22,085 Z 6,744 1,090 18,930 $96,200 $15,700 $315,500 Determine which of the operating segments are reportable based on the: Reportable Segments (a) Revenue test. (b) Operating profit (loss) test. (c) Identifiable assets test.

Answer 1

(a) Revenue test.

W = 55,795/96,200 = 58% REPORTABLE

X = 9,610/96,200 = 10% REPORTABLE

Y = 24,050/96,200 = 25% REPORTABLE

Z = 6,744/96,200 = 7% - LESS THAN 10% NOT REPORTABLE

Step-by-step explanation:

Reportable segments are those operating segments whose revenues, profit or loss, and assets are 10% or more of the combined revenue, profit or assets of all operating segments.

Operating Segment Total Revenue Operating Profit (Loss) Identify Assets

W $55,795 $15,220 $189,990

X $9,610 $2,410 $91,495

Y $24,050 $(3,020) $22,085

Z $6,744 $1,090 $18,930

$96,200 $15,700 $315,500

Reportable Segments by:

(a) Revenue test.

W = 55,795/96,200 = 58% REPORTABLE

X = 9,610/96,200 = 10% REPORTABLE

Y = 24,050/96,200 = 25% REPORTABLE

Z = 6,744/96,200 = 7% - LESS THAN 10% NOT REPORTABLE

(b) Operating profit (loss) test.

W = 15,220/18,720 = 81.3% REPORTABLE

X = 2,410/18,720 = 12.87% REPORTABLE

Y = 3,020/18,720 = 16.13% REPORTABLE

Z = 1,090/18,720 = 5.82% - LESS THAN 10% NOT REPORTABLE

* TOTAL PROFIT HERE EXCLUDES LOSSES - ADD ONLY PROFITS

(c) Identifiable assets test.

W = 189,990/315,500 = 60% REPORTABLE

X = 91,495/315,500 = 29% REPORTABLE

Y = 22,085/315,500 = 7% LESS THAN 10% NOT REPORTABLE

Z = 18,930/315,500 = 6% LESS THAN 10% NOT REPORTABLE