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    PracticeCPA®CPA BAR Practice Exam 2Question 40
    Hard1 markMultiple Choice
    Area II: Technical AccountingBARArea IISegment Reporting

    CPA · Question 40 · Area II: Technical Accounting

    A public company has four operating segments. <br/>Segment A: Revenue $400, Profit $50<br/>Segment B: Revenue $100, Loss $20<br/>Segment C: Revenue $50, Profit $5<br/>Segment D: Revenue $40, Loss $5<br/>Total Revenue = $590.<br/><br/>Which segments are reportable based on the Revenue test?

    Answer options:

    A.

    A and B

    B.

    A only

    C.

    A, B, and C

    D.

    All segments

    How to approach this question

    10% Revenue Test: Is Segment Revenue >= 10% of Combined Revenue of all segments?

    Full Answer

    A.A and B✓ Correct
    Threshold = $590 * 10% = $59. Segment A ($400) and Segment B ($100) exceed this. C ($50) and D ($40) do not.

    Common mistakes

    Using profit instead of revenue for the revenue test.
    Question 39All questionsQuestion 41

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