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AICPA CPA-Financial Exam - Topic 1 Question 74 Discussion
Topic #: 1
Grum Corp., a publicly-owned corporation, is subject to the requirements for segment reporting. In its income statement for the year ended December 31, 1991, 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, 1991, were $40,000,000.
Cott Co.'s four business segments have revenues and identifiable assets expressed as percentages of Cott's total revenues and total assets as follows:
Which of these business segments are deemed to be reportable segments?
Rule: A segment must be at least 10% of:
1. Combined revenues (whether intersegment or unaffiliated customers), or
2. Operating income (of all segments not having an operating loss), or
3. Identifiable assets.
Choice 'd' is correct. Ebon, Fair, Gel, and Hak, since all four companies meet at least one of the criteria.
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