Faulk Ltd Has Provided the Following Information - Under the Profit Test Only, Which Segments Are Reportable

question 20

Multiple Choice

Faulk Ltd. has provided the following information: $$\begin{array} { | c | r | r | r | } \hline \text { Segment } & \text { Assets } & \text { Revenues } & \text { Profits } \\\hline \text { A } & \$ 60,000 & \$ 18,000 & \$ 9,000 \\\hline \text { B } & 120,000 & 90,000 & 3,000 \\\hline \text { C } & 120,000 & 52,500 & 15,000 \\\hline \text { D } & 30,000 & 300,000 & 120,000 \\\hline\end{array}$$
- Under the profit test only, which segments are reportable?

• A)Segment A only
• B)Segment C only
• C)Segments A and C only
• D)Segments C and D only

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Definitions:

Acquiree

The business or businesses of which the acquirer obtains control in a business combination.

Acquisition Consideration

The total value transferred by one company to acquire another, including cash, shares, and other assets.

Tangible Asset

An asset that has physical form and value, such as equipment or real estate.

Economic Benefits

The advantageous gains obtained from resources or actions, including income, profits, or intangible assets like brand reputation.