Page 453 - SBR Integrated Workbook STUDENT S18-J19
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Answers
Chapter 14
Example 1
Operating segments
The revenue test
Total revenue is $1,010 million ($1,000m + $10m). Any operating segments
with revenue exceeding $101 million ($1,010m × 10%) must therefore be
reported.
Europe, South East Asia and North America pass this test.
The asset test
Total segment assets are $3,100 million ($300m + $800m + $1,900m + $80m
+ $20m). Therefore, operating segments with total assets exceeding $310
million ($3,100 × 10%) must be reported.
South East Asia and North America both pass the assets test.
Results test
The total profit of the profit making segments is $165 million ($60m + $103m +
$1m + $1m). The total loss of the loss making segments is $10 million.
Therefore, any segment with a result that exceeds $16.5m ($165m × 10%)
must be reported.
South East Asia and North America pass this test.
The 75% test
Europe, South East Asia and North America have all passed at least one of
the 10% tests and so must be separately reported.
Together, their external revenue is $960m ($200m + $300m + $460m),
representing 96% of external revenue. The reportable segments identified
exceed 75% of external revenue, so no further operating segments need to be
separately reported.
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