According to the 10 percent test, what is required for reported profit or loss to qualify as a reportable segment?

For a profit or loss to qualify as a reportable segment according to the 10 percent test, it is essential that the absolute amount of the reported profit or loss is 10% or more of the greater of the combined profits or losses of all segments. This means that when evaluating segments to determine whether they should be reported separately in the financial statements, the emphasis is on achieving a significant threshold of profitability or loss that represents a meaningful portion of the organization's overall financial picture.

The rationale behind this threshold is to ensure that only those segments that have a substantial impact on the overall financial results are reported distinctly. This helps users of the financial statements to make more informed decisions and receives necessary disclosures about segments that contribute significantly to the business.

The other options do not align with the requirements set forth in the 10 percent test. The focus on both profits and losses being compared to the combined results makes this criterion crucial for proper segment reporting. Understanding these criteria is vital for accurate financial reporting and compliance with accounting standards.