Exam 12: Interim Reporting and Disclosures About Segments of an Enterprise

During the first quarter, a company's application of lower of cost or market methods indicated a $150,000 loss from a temporary market decline, which is expected to be restored in the fiscal year. During the second quarter, the market reversed the decline. Which of the following situations indicates a proper treatment of these facts?

Lancaster Inc. expects to have taxable income of $275,000 for 20X1 and a tax credit of $12,250. Assume that the graduated tax rate schedule is as follows: Required: Determine the tax expense for the first quarter, assuming that taxable income is $65,000.

In order to generate interim financial reports that contain a reasonable portion of annual expenses, which of the following statements is true?

For each of the following independent cases, determine the estimated effective tax rate to be used for the current quarter's interim statements.

Which of the following best describes how the tax benefit resulting from the extraordinary loss in an interim period is recognized?

The management approach to segmental reporting

Millstone Company's first-quarter 20X3, pretax income is $25,000. The company anticipates an annual tax credit of $5,500. Millstone is projecting income for the remaining three quarters of $95,000. For the second quarter of 20X4, Millstone reports $55,000 of pretax income with a projected pre-tax income for the remainder of the year of $65,000. Millstone does not have any permanent differences between taxable income and financial income. In the second quarter, Millstone decided to change their depreciation method used for financial reporting purposes. The change in depreciation methods has the following effect on the calculation and projection of income for Millstone: The effect of the change on prior years is a decrease to retained earnings of $30,000. The current tax schedule is: Required: Calculate the first and second quarter interim tax expenses on continuing income.

Ansfield, Inc. has several potentially reportable segments. The following financial information has been determined for the current fiscal year: For Ansfield, Inc. to report a significant portion of its financial information as segments, its segments, in total, must represent

Which of the following is not a limitation on the number of reportable segments?

The following lists account titles found on the books of Icell Corporation: a.Research and Development b.Inventory c.Annual Bonuses d.Unfavorable Materials Usage VarianceRequired:Discuss how each of these items is accounted for in interim financial statements.

The primary emphasis of interim reporting is on:

Explain the difference in the independent and integral viewpoints of accounting for interim periods. Which method best describes the accepted accounting practice for interim financial reporting?

In determining if two operating segments may be combined into one, which of the following factors should be considered?

The tax benefit associated with a year-to-date operating loss should be recognized if:

Ansfield, Inc. has several potentially reportable segments. The following financial information has been determined for the current fiscal year: The minimum amount of revenues a segment must have to qualify as reportable is ____.

Which of the following is not required to be disclosed for a reportable segment?

It is possible for segments to qualify as reportable, but not represent a material portion of the enterprise. What test is applied to ensure the segments reported represent a significant portion of enterprise activity?

Cammy Company had inventory at the end of the first quarter having a cost of $420,000 and a market value of $410,000. Cammy recognized a $10,000 loss in its first quarter financial statements due to market declines. At the end of the second quarter, the inventory had a cost of $450,000, and a market value of $480,000. Cammy's action in the second quarter should be:

Information about the seven segments of the Kenny Corporation is presented below. Determine which of the segments are reportable and why.

The acquisition of a paper mill by a large publishing company is an example of