Which of the Following Tests May Be Used to Determine

question 40

Multiple Choice

Which of the following tests may be used to determine if an industry segment of an enterprise is a reportable segment under FASB ASC Topic 280?

• A) Its revenue (both from external customers and internal segments)is equal to or greater than 10 percent of total revenue (external and internal).
• B) The absolute value of its operating profit is equal to or greater than 10 percent of the total of the operating profit for all segments that reported profits (or the total of the losses for all segments that reported losses).
• C) The segment contains 10 percent or more of the combined assets of all operating segments.
• D) All of these.

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Definitions:

Perfectly Competitive Market

A market structure characterized by numerous small firms, identical products, and easy entry and exit, leading to a situation where no single firm can influence market prices.

Average Total Cost

The total cost of production divided by the quantity of output produced; encompasses both fixed and variable costs.

Long-run Equilibrium

A state where all the factors of production in an economy are being used in the most efficient way, leading to a situation where there is no tendency for change.

Perfectly Competitive Market

An economic model marked by a multitude of buyers and sellers, with no barriers to entering or leaving, and identical products.