Question

Identifiable assets for the seven industry segments of Foley Corporation are:

Penley $ 500 Cheng 200

Konami 550 Takuhi 150

KSC 250 Molina 475

Red Moon 400

Based only on the identifiable assets test, which industry segments are reportable?

Short answer

Penley, Konami, Red Moon, and Molina’s industries are reportable.

Step-by-step solution

Meaning of Segment Reporting

Segment reporting is a description of the working parts of a company's disclosures that accompany its financial statements. Segment reporting is mandatory for publicly traded companies, but not for privately-owned companies.

Determining the industry segments that are reportable

Total Asset is $2,525

Working Notes:

$\begin{array}{rcl}\mathrm{Total}\mathrm{assets}& =& \mathrm{Total}\mathrm{value}\mathrm{of}\mathrm{all}\mathrm{assets}\mathrm{of}\mathrm{all}\mathrm{different}\mathrm{industries}\\ & =& \$500+\$550+\$250+\$400+\$200+\$150+\$475\\ & =& \$2,525\end{array}$

Asset Test Value is $252.50

Working Notes:

$\begin{array}{rcl}\mathrm{Asset}\mathrm{test}\mathrm{value}& =& \mathrm{Total}\mathrm{asset}\times \mathrm{asset}\mathrm{rate}\\ & =& \$2,525\times 10\%\\ & =& \$252.50\end{array}$

This condition is met by Penley, Konami, Red Moon, and Molina because their identifiable assets are equal to or greater than $252.50.