The Canton Corporation operates in four distinct business segments. The segments, along with 2021 information on revenues, assets, and net income, are listed below ($ in thousands):
Segment Revenues Assets Net Income
Pharmaceuticals 2,000 $1,000 $200
Plastics 3,000 1,500 270
Farm equipment 2,500 1,250 320
Electronics 500 250 40
Total company 8,000 4,000 830
Required:
1. For which segments must Canton report supplementary information according to U.S. GAAP?
a. Pharmaceuticals
b. Plastics
c. Farm equipment
d. Electronics

US GAAP requires that companies that operate in distinct business segments must provide supplementary information for the segment or segments that are unrelated or very different than the rest.

In this case, plastics, farm equipment and electronics are all distinct manufacturing segments that share certain common characteristics. E.g. they manufacture and sell products that final consumers or other businesses might purchase. Their R&D and production times can be considered normal, from months to a couple of years.

But pharmaceuticals are completely different, specially concerning the research and development expenses and time frames that apply to that specific industry. E.g. all pharmaceutical companies are trying to develop a vaccine that ends the current health crisis and they are spending millions. But at the end, just a couple of them will be able to do so. The companies that are able to successfully produce the vaccine will make billions, but the rest will make nothing. If we consider normal drugs that a company might develop, the time it takes to get authorization form the FDA is very long, sometimes several years. Drug patents last 20 years and pharmaceutical companies keep selling the same drugs for even longer periods.