Question :
Bennett Inc. is a publicly held company whose diversified operations have been separated into five industry segments. Bennett is in the procedure of preparing its annual financial statements for the year ended 31st December, 20X5. The given information has been collected for the preparation of the segment reports needed by FASB 131 (ASC 280).
BENNETT INC.
Selected Data
For the Year Ended 31st December, 20X5(in thousands)
Power Fastening Household Plumbing Security
Item Tools Systems Products Products Systems
Sales to Unaffiliated
Customers $32,000 $4,500 $4,800 $3,000 $2,000
Intersegment Sales 10,000 5,500 200 1,000 ----
Total Revenue 42,000 10,000 5,000 4,000 2,000
Cost of Goods Sold 30,000 8,000 4,500 3,100 1,700
Operating Profit 4,500 1,000 (600) 700 (100)
Net Income 2,600 800 (750) (100) (200)
Segment Assets 50,000 23,000 17,000 6,000 4,000
Required:
a. Evaluate which of the operating segments are reportable segments for Bennett. Your determination should include all needed tests and the results of those tests for all of Bennett's five segments.
b. The reportable segments evaluated in (a) must show a substantial portion of Bennett's total operations when taken together. Explain how to determine whether a substantial portion of Bennett's operations are explained by its segment information.