Question

The following information pertains to Agnew Corp. and its divisions for the year ended December 31, 2016.

Sales to unaffiliated customers $3,500,000
Intersegment sales of products similar to those sold to
unaffiliated customers 1,050,000
Interest earned on loans to other operating segments 70,000
Agnew and all of its divisions are engaged solely in manufacturing operations. Agnew has a reportable segment if that segment's revenue exceeds
a. $462,000.
b. $455,000.
c. $357,000.
d. $350,000.

Answer 1

Agnew Corp.

Agnew has a reportable segment if that segment's revenue exceeds

a. $462,000.

Step-by-step explanation:

a) Data and Calculations:

Sales to unaffiliated customers $3,500,000

Intersegment sales of products similar to those sold to

unaffiliated customers 1,050,000

Interest earned on loans to other operating segments 70,000

Total entity income $4,620,000

Reportable segment = 10% of $4,620,000 = $462,000, which is more than

Intersegment sales and interest = $1,120,000 ($1,050,000 + $70,000)