In its financial reports, Cracker Barrel states that their stores represent a single, integrated operation with two related substantially integrated product lines. The operating expenses of the restaurant and retail product lines of a Cracker Barrel store are shared and are indistinguishable in many respects. Accordingly, the Company manages its business on the basis of one reportable operating segment. All of the Company's operations are located within the United States.9 Total revenue was comprised of the following at:

2017 2016 2015

Restaurant $2,351,212 $2,323,199 $2,269,610

Retail 575,077 589,152 572,674

Total revenue $2,926,289 $2,912,351 42,842,284

In a statement provided to NashvillePost.com, Cracker Barrel execs said their financial reporting practices comply with Securities and Exchange Commission requirements and were actually the subject of a note from the regulators in the fall of 2003. The company responded to that inquiry soon after and the SEC indicated it was satisfied with the explanation given. However, as one critic contended: "In the final analysis, you are either not properly measuring the restaurant and retail businesses, and thus you are not properly managing them, or you are measuring/managing them properly but failing to report both operating segments to your owners."10

As outlined in Topic 280 of the FASB Codification, two or more operating segments may be aggregated for reporting purposes even though they may be individually material, if aggregation is consistent with the objectives and basic principles of Topic 280, if they exhibit similar economic characteristics, and if the segments are similar in each of the following areas:

The nature of the products and services;

The nature of the production processes;

The type or class of customer for their products and services;

The distribution methods for their products or services; and

If applicable, the nature of the regulatory environment in which they operate.

Required:

In your opinion, does CB have two reportable segments? Why or why not?

Management often stresses that employee compensation cannot be separated between the restaurant and retail stores. Is this a legitimate reason not to report them as separate reporting units, in your opinion? Why or why not? Defend your answer.