Which Tests Must a Company Use to Determine Which Operating

question 108

Multiple Choice

Which tests must a company use to determine which operating segments require separate disclosure?

• A) Revenue test and asset test.
• B) Revenue test, profit or loss test, and asset test.
• C) Revenue test and profit or loss test.
• D) Profit or loss test and asset test.
• E) Revenue test, asset test, and liability test.

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Definitions:

Worst-Case Scenario

The most severe or unfavorable outcome that may happen in a given situation, often used in planning and risk management.

Soft Rationing

An internal policy mechanism by which a company limits the amount of funding allocated to new or existing projects, without a shortage of available funds.

NPV Project

A project evaluated using the Net Present Value method, which calculates the present value of all cash flows associated with the project, minus the initial investment.

Straight-Line

A method of calculating depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.