Ridge company is in the process of determining its reportable segments for the year ended December 31 2012. As the person responsible for determining this information, you gather the following information.
Operating Sales to external Intersegment Sales Segment Segment
Segments Customers and Transfers profit(loss) Assets
A 1000 80 (40) 400
L 400 20 (43) 80
M 320 - 8 160
R 1420 - 16 740
S 160 40 (9) 100
Z 180 120 60 240
a. Using the appropriate tests, determine which of the industry segments listed above are reportable for 2012. Show your supporting computations in good form.
b. Indicate whether or not Ridge 's reportable segments satisfy the 75 percent test. Show computation in good form.
The key here is to separate the loss segments from the profitable segments. Then you total the profitable and ...
Your tutorial show you how to handle unprofitable segments in applying the 10% of profit rule (segregation process), tests for segments and then shows the 75% rule test.