The following data relate to Falcon Corporation's industry segments:

Sales to
External Intersegment
Industry Segment Customers Sales Assets
Oil Exploration $80,000 $310,000
Refinery 240,000 720,000
Plastics 20,000 $20,000 120,000
Chemicals 220,000 160,000 980,000
Solar Power 20,000 75,000 270,000
Totals $580,000 $255,000 $2,400,000

Required:
1. Which of Falcon's operating segments would be considered reporting segments under the "revenue" test?

2. Which of Falcon's operating segments would be considered reporting segments under the "asset" test?

Requirement 1
The test value is 10% of the combined revenues of all operating segments including intersegment revenues, or, 10% × $835,000 or $83,500. Based on this test value, Refinery, Chemicals, and Solar Power would be the reporting segments because each of these segments has more than $83,500 in total sales.

Requirement 2
The test value is 10% of the combined identifiable assets or 10% × $2,400,000 or $240,000. Based on this test value, Oil Exploration, Refinery, Chemicals, and Solar Power would be the reporting segments because each of these segments has more than $240,000 in segment assets.