Tillman Fabrications Has Five Operating Segments,as Summarized Below

Question

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The Answer is Revenue test: Total revenues (external and internal)= $27,940,000 × 10% = $2,794,000 = test value limit;therefore Wood,Plastic,Metal,and Fabric are reportable segments.
Operating Profit test: Total Operating Profit of segments with operating profits (Metal and Paper)= $1,890,000,and Total Operating Loss of segments with operating losses (Wood,Plastic,Fabric)= $(2,070,000).Since the absolute value of the total operating losses is greater than the absolute value of the total operating profits,we will use 10% of the total operating losses as our test value limit = $207,000;therefore Wood,Plastic,Metal and Fabric are reportable segments.
Asset test: Total assets of all operating segments = $3,060,000 × 10% = $306,000 = test value limit;therefore Wood,Plastic,Metal and Fabric are reportable segments.
Based on the three tests above,four operating segments meet at least one criteria to be a reportable segment (Wood,Plastic,Metal and Fabric).Total Revenue to external customers = $22,100,000,multiplied by 75% = $16,575,000.Since the sales revenue to external customers of the four reportable segments amounts to $20,500,000,the 75% test has been met by those four segments and no further segments must be included in separate reporting.

Tillman Fabrications Has Five Operating Segments,as Summarized Below

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