Evaluate which of the operating segments are reportable

Assignment Help Financial Accounting

Reference no: EM133270

Question :

Bennett Inc. is a publicly held company whose diversified operations have been separated into five industry segments. Bennett is in the procedure of preparing its annual financial statements for the year ended 31^st December, 20X5. The given information has been collected for the preparation of the segment reports needed by FASB 131 (ASC 280).

BENNETT INC.

Selected Data

For the Year Ended 31^st December, 20X5(in thousands)

Power Fastening Household Plumbing Security

Item Tools Systems Products Products Systems

Sales to Unaffiliated

Customers $32,000 $4,500 $4,800 $3,000 $2,000

Intersegment Sales 10,000 5,500 200 1,000 ----

Total Revenue 42,000 10,000 5,000 4,000 2,000

Cost of Goods Sold 30,000 8,000 4,500 3,100 1,700

Operating Profit 4,500 1,000 (600) 700 (100)

Net Income 2,600 800 (750) (100) (200)

Segment Assets 50,000 23,000 17,000 6,000 4,000

Required:

a. Evaluate which of the operating segments are reportable segments for Bennett. Your determination should include all needed tests and the results of those tests for all of Bennett's five segments.

b. The reportable segments evaluated in (a) must show a substantial portion of Bennett's total operations when taken together. Explain how to determine whether a substantial portion of Bennett's operations are explained by its segment information.

Reference no: EM133270

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