Question

P 15-1 Apply threshold tests Rise Corporation is based in the United States and its business is divided into segments based on geo- graphical location. The following information has been accumulated for use in preparing segment dis- closures in 2016: Intersegment Sales United States Canada Europe Latin America Unaffiliated Sales $250,000 200,000 130,000 120,000 100,000 50,000 20,000 10,000 $880,000 10,000 30,000 Total $250,000 200,000 130,000 130,000 130,000 50,000 30,000 10,000 $930,000 Japan Korea Singapore Other 10,000 $50,000 REQUIRED 1. Determine Rise's reportable segment under the 10 percent revenue test. 2. Are additional reportable segments required? 3. Prepare a schedule to disclose segmented revenue and its reconciliation for 2016.

Answer 1

As per 10% test, segment if it has at least 10% of the revenues, 10% of the profit or loss, or 10% of the combined assets of the entity needed to be reported separately. If the total revenue of the segments you have selected under the revenue test comprises less than 75% of the entity's total revenue, then company need to report other segments to meet that threeshold limit. Sales Intersegment sales Total US Canada Europe L. America Japan korea Singapore Other 250000 200000 130000 120000 100000 50000 20000 10000 Segment having Percentage (Segment more than 10% Total sales / Total Sales ) revenue need to report 26.88 Yes 21.51 Yes 13.98 Yes 13.98 Yes 13.98 Yes 5.38 No 3.23 No 1.08 No 250000 200000 130000 130000 130000 50000 30000 10000 10000 30000 10000 Total 880000 50000 930000 100

If the total revenue of the segments you have selected under the revenue test comprises less than 75% of the entity's total revenue, then company need to report other segments to meet that threeshold limit. Sales Percentage (Segment Segment having more Total sales excluding than 10% revenue intersegment sales / need to report Total Sales ) US Canada Europe L. America Japan 250000 200000 130000 120000 100000 28.41 22.73 14.77 13.64 11.36 Yes Yes Yes Yes Yes Total sales of all segments 880000 90.91 As selected segments comprises more than 75% of the entity's total revenue, no need to report any additional segment

Intersegment sales Total US Canada Europe L. America Japan Other Segments Sales 250000 200000 130000 120000 100000 80000 250000 200000 130000 130000 130000 90000 10000 30000 10000 Total 880000 50000 930000