Faru Co. identified five industry segments: (1) plastics, (2) metals, (3) lumber, (4) paper, and (5) finance. The company properly consolidated the segments when it prepared its annual financial statements. Information describing each segment is presented below (in thousands). Plastics Metals Lumber Paper FinanceSales to outside parties$8,215 $2,787 $827 $451 $0 Intersegment revenues transfers 138 170 125 140 0 Interest income from outside parties 0 25 8 0 242 Interest income from intersegment loans 0 0 0 0 207 Operating expenses 5,088 2,096 1,191 753 21 Interest expense 79 21 66 40 113 Tangible assets 1,678 3,882 408 729 135 Intangible
assets 94 469 0 62 863 ?Prepare the revenue test and determine which of these segments was separately reportable.
What will be an ideal response?
Revenues include sales to outside parties, intersegment revenues transfers, and interest income.
| Revenue Test (numbers in thousands) | |||||||||||||
| Segment | Revenues | Percentage | ? | ? | ? | ? | ? | ? | |||||
| Plastics | $ | 8,353 | 62.64 | % | reportable | ||||||||
| Metals | 2,982 | 22.36 | % | reportable | |||||||||
| Lumber | 960 | 7.20 | % | ||||||||||
| Paper | 591 | 4.43 | % | ||||||||||
| Finance | 449 | 3.37 | % | ||||||||||
| Total | $ | 13,335 | |||||||||||
? | |||||||||||||
| ? | |||||||||||||
| Reportable segment = at least $1,333.5 (in thousands) of revenues. | |||||||||||||
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