Segment Disclosures in the Financial Statements [CMA Adapted]Bennett Inc. is a publicly held corporation whose diversified operations have been separated into five industry segments. Bennett is in the process of preparing its annual financial statements for the year ended December 31, 20X5. The following information has been collected for the preparation of the segment reports required by FASB 131 (ASC 280).BENNETT INC.Selected DataFor the Year Ended December 31, 20X5(in thousands)
Power Fastening Household Plumbing SecurityItem Tools Systems Products Products SystemsSales to UnaffiliatedCustomers $32,000 $4,500 $4,800 $3,000 $2,000Intersegment Sales 10,000 5,500 200 12,000 —-Total Revenue 42,000 10,000 5,000 4,000 2,000Cost of Goods Sold 30,000 8,000 4,500 3,100 12,700Operating Profit 4,500 12,000 (600) 700 (100)Net Income 2,600 800 (750) (100) (200)Segment Assets 50,000 23,000 17,000 6,000 4,000Required:a. Determine which of the operating segments are reportable segments for Bennett. Your determi-nation should include all required tests and the results of those tests for each of Bennetts five segments.
b. The reportable segments determined in (a) must represent a substantial portion of Bennetts total operations when taken together. Describe how to determine whether a substantial portion of Bennetts operations are explained by its segment information.