Question

Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands):

	Segments
	Red				Blue				Green				Pink				Black				White
Sales to outside parties	$	1,822			$	823			$	525			$	320			$	132			$	110
Intersegment revenues		27				102				120				0				27				313
Salary expense		625				390				413				323				328				73
Rent expense		150				177				92				103				53				42
Interest expense		76				70				93				60				25				16
Income tax expense (savings)		152				98				72				(97	)			(75	)			0

Consider the following questions independently. None of the six segments has a primarily financial nature.

a. What minimum revenue amount must any one segment generate to be of significant size to require disaggregated disclosure?

b. If only Red, Blue, and Green necessitate separate disclosure, is Fairfield disclosing disaggregated data for enough segments?

c. What volume of revenues must a single customer generate to necessitate disclosing the existence of a major customer?

d. If each of these six segments has a profit or loss (in thousands) as follows, which warrants separate disclosure? (Select all that apply.)

Red	$	1,085
Blue		460
Green		151
Pink		(105	)
Black		(233	)
White		319

Answer 1

a)

An operating Segment is reportable if it meets any of the following three criteria-

1 The revenue for the segment is 10% or more of the combine revenue.

2.The absolute value of profit/ loss is 10% or more of the greater of a) the combined profit of all operating segments that don't report a loss, or b)the combined loss of all operating segments that did report a loss.

3. The assets of the segment are 10% or more of the combined assets.

so. we will calculate the value of total revenue.

	Red	blue	green	pink	black	white
sales to outside parties	1822	823	525	320	132	110
Intersegemnt revenue	27	102	120	0	27	313
Total	1849	925	645	320	159	423

Total Revenue-4321                      42 %       21% 14%    7% 3% 9%

On the basis of above we will report red, blue and green.

b)one of the condition is that total revenue attributable to reporting segments must be atleast 75% of the combined revenue.

since the total revenue of red, blue and green segments is more than 75%.so, fairfield disclosing disaggregated data for enough segments.

c)In my opinion, if 10% or more of enterprise revenue is derived feom sales to a single customer, disclosure of that fact and the amount of revenue from each such customer must be disclosed.

d)

	RED	BLUE	GREEN	PINK	BLACK	WHITE
P/L	1085	460	151	(105)	(233)	319
%	54%	22%	7%	5.2%	11.56	15.83

Total positive result- 2015

Total negative result- (388)

So, we will higher of above for calculating the base 2015 will be the base.

on the basis of above, Red, Blue, Black and white segments are to be reported.