Free Preparation Discussions
MENU
AICPA Exam CPA-Financial Topic 3 Question 13 Discussion
Topic #: 3
YIV, Inc. is a multidivisional corporation, which has both intersegment sales and sales to unaffiliated customers. YIV should report segment financial information for each division meeting which of the following criteria?
Choice 'c' is correct. Segment revenue is 10% or more of combined revenue of all the company segments.
Rule: To be significant enough to report on, a segment must be at least 10% of:
1. Combined revenues (whether intersegment or affiliated customers) or
2. Operating profit (of all segments not having an operating loss), or
3. Identifiable assets.
Choice 'a' is incorrect. Rule is 10% of 'operating profit,' not 'consolidated profit.'
Choice 'b' is incorrect. Segments with 'operating losses' are not combined with those having 'operating profits' in determining a segment.
Choice 'd' is incorrect. 'Consolidated revenue' would not include 'intersegment revenue.' Rule is 'combined revenue,' not 'consolidated revenue.'
Currently there are no comments in this discussion, be the first to comment!