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.

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).

BENNETT INC.

Selected Data

For the Year Ended December 31, 20X5

(in thousands)

 

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

Required:

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.

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