Question

Determine which operating segments of Bardon Ltd are reportable in accordance with the guidelines provided in AASB 8. Included in the $480,000 revenue of Energy is an amount of $58,000 that is sold to Engineering. Revenue Profit or Loss Assets Operating Segment ($) ($) ($) Entertainment 70 000 (5 000) 16 000 Engineering 310 000 97 000 145 000 Energy 480 000 (49 000) 180 000 Mining 60 000 8 000 9 000

Answer 1

Reportable segments are those operating segments whose:

• Revenues (internal or external) are 10% or more of the combined revenue of all operating segments, or
• Profit or loss is 10% or more of the greater of (a) the combined profit of profit-making operating segments, and (b) the combined loss of loss-making operating segments, or
• Assets are 10% or more of combined asset of all operating segments.

However, the reportable operating segments should cover at least 75% of the company's total revenue.

Using above guidlines Reportable segments would be as follows

Operating segments	Entertainment	Engineering	Energy segment	Mining Segment	Totals
Revenue (internal + External )	70,000	310,000	480,000	60,000	920,000
% of total revenue	7.61%	33.70%	52.17%	6.52%	100%
Reportable or not	No	Yes	Yes	No
Profits/(Loss)	(5,000)	97,000	(49,000)	8,000	105,000
% of total profits	4.76%	92.38%	46.67%	7.62%
Reportable or not	No	Yes	Yes	No
Assets	16,000	145,000	180,000	9,000	350,000
% of total assets	4.57%	41.43%	51.43%	2.57%
Reportable or not	No	Yes	Yes	No

Reportable segments should cover at least 75% of total revenue

in the present problem it will be = 790,000/920,000 = 85.87%, Hence reportable segments are already cover more than 75% of total revenue, so no more segment will be reportable.

Hence, Engineering and Energy are the reportable segments.