Question

Answer is B.

PA-05055 The Ajax Corporation reported the following operating results and net income (net loss) from its components for the year ended December 31: Net Component Eliminations Consolidated Astor 215,000 (120,000) $ 95,000 30,000 30,000 Bejax 50,000 (130,000) Carter(180,000) Davis 30,000 80,000 (50,000) Elbow (20,000) 20,000 Total S 125,000 S (100,000) 25,000 ased purely on operating results, which of the components would be deemed reportable segments? A. Astor, Bejax, Carter, Davis, and Elbow. B. Astor, Carter, and Davis. C. Astor, Bejax, and Davis D. Astor, Bejax, Carter, and Davis.

Why is Carter included in the reporting segment?

Answer 1

Reportable segments are segments which are a) 10% or more of combined revenue of all segments b)10% or more of 1) combined profit of the segments making profit and 2) combined losses pf loss making segments. C) 10% or more of combined assets of the segments
So the total combined losses of loss making segment is	$130,000
and in component also	$200,000
100% is of carter for consolidated income and 90% for component. Hence Carter will be reported as reportable segment
The component of profit making is
215000+30000+80000	325000
325000*10%	32500
Hence Davis and Astor has more than $32500 hence reportable segment
So answer is
Option B Davis, Astor and Carter
If any doubt please comment

Answer 2

Read the rule

Rule 1. Combine Reported Profit of all segment that did not report as loss

(refering to A & D 215,000 & 80,000 income > 32,500 Threshold)

Rule 2. Combine report loss of all operation segment that did report loss

(refering to C 180,000 Loss > 32,500 Threshold)

Ans: ACD are reporting segment