ExpertHard1 markMultiple Choice
CPA · Question 40 · Area II: Technical Accounting
A public company has four operating segments. <br/>Segment A: Revenue $400, Profit $50<br/>Segment B: Revenue $100, Loss $20<br/>Segment C: Revenue $50, Profit $5<br/>Segment D: Revenue $40, Loss $5<br/>Total Revenue = $590.<br/><br/>Which segments are reportable based on the Revenue test?
A public company has four operating segments. <br/>Segment A: Revenue $400, Profit $50<br/>Segment B: Revenue $100, Loss $20<br/>Segment C: Revenue $50, Profit $5<br/>Segment D: Revenue $40, Loss $5<br/>Total Revenue = $590.<br/><br/>Which segments are reportable based on the Revenue test?
Answer options:
A.
A and B
B.
A only
C.
A, B, and C
D.
All segments
How to approach this question
10% Revenue Test: Is Segment Revenue >= 10% of Combined Revenue of all segments?
Full Answer
A.A and B✓ Correct
A
Threshold = $590 * 10% = $59. Segment A ($400) and Segment B ($100) exceed this. C ($50) and D ($40) do not.
Common mistakes
Using profit instead of revenue for the revenue test.
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