Segment Disclosures in the Financial Statements [CMA Adapted]
Bennett Inc. is a publicly held corporation whose diversified operations have been separated into five industry segments. Bennett is in the process of preparing its annual financial statements for the year ended December 31, 20X5. The following information has been collected for the preparation of the segment reports required by FASB 131 (ASC 280).
For the Year Ended December 31, 20X5
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
a. Determine which of the operating segments are reportable segments for Bennett. Your determi-nation should include all required tests and the results of those tests for each of Bennett’s five segments.
b. The reportable segments determined in (a) must represent a substantial portion of Bennett’s total operations when taken together. Describe how to determine whether a substantial portion of Bennett’s operations are explained by its segment information.