Chat with AIExam 15: Segment and Interim Financial Reporting
For internal decision-making purposes,Falcon Corporation identifies its industry segments by geographical area.For 2011,the total revenues of each segment are provided below.There are no intersegment revenues.
Required:
1.Which operating segments will be considered reporting segments based on the revenue test?
2.What is the test value for determining whether a sufficient number of segments are reported?
3.What will be the minimum number of segments that must be reported?
Required:
1.Which operating segments will be considered reporting segments based on the revenue test?
2.What is the test value for determining whether a sufficient number of segments are reported?
3.What will be the minimum number of segments that must be reported?
(38) 
VerifiedRequirement 1
The reporting segments will be those segments whose segment revenue is 10% or more of the combined revenues of all operating segments.The total combined revenue of the operating segments is $149,500,000 and 10% of that number is $14,950,000.Only Canada and the United States will satisfy the 10% revenue test.
Requirement 2
The appropriate test value is the "75% of consolidated revenues" test which is $112,125,000 ($149,500,000 × 75%).
Requirement 3
Canada and the United States have combined revenues that total $98,000,000.The next largest segment in revenues is Other European at $14,000,000 which would get the total revenues to $112,000,000.Falcon would have to report one additional segment,European Union,to meet the 75% test for revenue.
Tillman Fabrications has five operating segments,as summarized below:
Required:
Determine which of the operating segments of Tillman Fabrications are reportable segments for the period shown.
Required:
Determine which of the operating segments of Tillman Fabrications are reportable segments for the period shown. (43) VerifiedRevenue test: Total revenues (external and internal)= $27,940,000 × 10% = $2,794,000 = test value limit;therefore Wood,Plastic,Metal,and Fabric are reportable segments.
Operating Profit test: Total Operating Profit of segments with operating profits (Metal and Paper)= $1,890,000,and Total Operating Loss of segments with operating losses (Wood,Plastic,Fabric)= $(2,070,000).Since the absolute value of the total operating losses is greater than the absolute value of the total operating profits,we will use 10% of the total operating losses as our test value limit = $207,000;therefore Wood,Plastic,Metal and Fabric are reportable segments.
Asset test: Total assets of all operating segments = $3,060,000 × 10% = $306,000 = test value limit;therefore Wood,Plastic,Metal and Fabric are reportable segments.
Based on the three tests above,four operating segments meet at least one criteria to be a reportable segment (Wood,Plastic,Metal and Fabric).Total Revenue to external customers = $22,100,000,multiplied by 75% = $16,575,000.Since the sales revenue to external customers of the four reportable segments amounts to $20,500,000,the 75% test has been met by those four segments and no further segments must be included in separate reporting.
Osprin Corporation has three operating segments,as summarized below:
Required:
1.Using the revenue test,what is the minimum amount of revenue of a reportable segment?
2.Using the operating profit or loss test,what is the minimum amount of operating profit or loss of a reportable segment?
3.Using the asset test,what is the minimum amount of assets of a reportable segment?
4.Based on the three tests,which segments will be separately reported?
Required:
1.Using the revenue test,what is the minimum amount of revenue of a reportable segment?
2.Using the operating profit or loss test,what is the minimum amount of operating profit or loss of a reportable segment?
3.Using the asset test,what is the minimum amount of assets of a reportable segment?
4.Based on the three tests,which segments will be separately reported? (34) Verified1.Total revenue including intersegment sales = $65,000 + $16,000 = $81,000.The test value limit is $8,100 ($81,000 × 10%).
2.The operating profit or loss test includes the operating profit or loss for each segment,which excludes Interest Expense and Income Tax Expense.
Total operating profit (all segments had profit;no segments had a loss)= $48,000.The test value limit is $4,800 ($48,000 × 10%).
3.The assets of all segments combined is $31,000.The test value limit is $3,100 ($31,000 × 10%).
4.Under the revenue test,the Capsule and Pill segments are reportable.The Liquid segment's total sales ($5,000 + $2,000)is $7,000 and does not exceed the limit.Under the operating profit or loss test,the Capsule and Pill segments are reportable.Under the asset test,the Capsule and Liquid segments are reportable.Because each segment meets at least one of the three tests,they will all be considered reportable segments.
Rollins Publishing has five operating segments,as summarized below:
Required:
Determine which of the operating segments of Rollins Publishing are reportable segments for the period shown.
Required:
Determine which of the operating segments of Rollins Publishing are reportable segments for the period shown. (43) Quantex Corporation has five operating segments,as summarized below:
Required:
Determine which of the operating segments of Quantex Corporation are reportable segments for the period shown.
Required:
Determine which of the operating segments of Quantex Corporation are reportable segments for the period shown. (40) Illiana Corporation has several accounting issues with respect to its interim financial statements for the first quarter of calendar 2011.
Required:
For each of the independent situations given below,state whether or not the method proposed by Illiana is acceptable.Justify each answer with appropriate reasoning.
1.Illiana will not perform a physical inventory at the end of the calendar quarter.It intends to estimate the cost of sales by using the gross profit inventory method.
2.Illiana grants volume discounts to its customers based upon their total annual purchases.The discounts are calculated on a sliding scale ranging from 1% to 8%.The amount of discount applied will progressively increase for a customer as the cumulative purchase total for the customer increases during the year.Illiana will use the average rate of discounts earned for each customer in the prior year as the expected discount rate for the current year.
3.At the beginning of the current quarter,Illiana incurred a large loss on the sale of some of its marketable securities.It intends to distribute the loss evenly to each of the four calendar quarters.
4.Illiana incurs maintenance costs during its year-end holiday shut down,but has minimal maintenance costs during the rest of the year.It intends to deduct one-fourth of the yearly estimated cost on its interim income statement.
(29) Which of the following conditions would not indicate that two business segments should be classified as a single operating segment?
(40) For internal decision-making purposes,Calam Corporation's operating segments have been identified as follows:
Required:
1.In applying the "operating profit or loss" test to identify reporting segments,what is the test value for Calam Corporation?
2.Using the "reported profit or loss" test,which of Calam's operating segments will also be reporting segments?
Required:
1.In applying the "operating profit or loss" test to identify reporting segments,what is the test value for Calam Corporation?
2.Using the "reported profit or loss" test,which of Calam's operating segments will also be reporting segments? (32) Dott Corporation experienced a $100,000 extraordinary loss in the second quarter of 2011 in their East Coast operating segment.The loss should be recognized
(36) On January 5,2011,Eagle Corporation paid $50,000 in real estate taxes for the calendar year.In March of 2011,Eagle paid $180,000 for an annual machinery overhaul and $10,000 for the annual CPA audit fee.What amount was expensed for these items on Eagle's quarterly interim financial statements?
(46) An enterprise has eight reporting segments.Five segments show an operating profit and three segments show an operating loss.In determining which segments are classified as reporting segments under the operating profits test,which of the following statements is correct?
(34) Cole Company has the following 2011 financial data: 
Cole Company should add segments if
Cole Company should add segments if (40) The following information was collected together for the Lawson Company relating to the preparation of their annual financial statements for 2011.For each item,indicate "yes" or "no" as to whether the item must be disclosed in the annual report.
_____ 1.Names of major customers for all reportable segments
_____ 2.Interest revenue and expense for all reportable segments
_____ 3.Cost of Goods Sold for all reportable segments
_____ 4.Depreciation expense and amortization expense for all reportable segments
_____ 5.Revenue from external customers for all reportable segments
_____ 6.The basis for aggregating any operating segments to arrive at reporting segments
_____ 7.Income tax expense (or benefit)for all reportable segments
_____ 8.Total assets for all reportable segments
_____ 9.Type of product or service for all reportable segments
_____ 10.Extraordinary items for all reportable segments
(40) For internal decision-making purposes,Elom Corporation's operating segments have been identified as follows:
Corporate assets are typically allocated back evenly to the segments for internal analysis purposes.
Required:
1.In applying the "asset" test to identify reporting segments,what is the test value for Elom Corporation?
2.Using the "asset" test,which of Elom's operating segments will also be reporting segments?
Corporate assets are typically allocated back evenly to the segments for internal analysis purposes.
Required:
1.In applying the "asset" test to identify reporting segments,what is the test value for Elom Corporation?
2.Using the "asset" test,which of Elom's operating segments will also be reporting segments? (43) In general,GAAP encourages the identification of reportable segments based on the following:
(42) GAAP requires disclosures for each reportable operating segment for each of the following,except for
(35) For internal decision-making purposes,Dashwood Corporation's operating segments have been identified as follows:
Revenues of the segments are external,with the exception of tools,which sold $400,000 to other segments,and Appliances,which sold $200,000 to other segments.
Required:
1.In applying the "revenue" test to identify reporting segments,what is the test value for Dashwood Corporation?
2.Using the "revenue" test,which of Dashwood's operating segments will also be reportable segments?
Revenues of the segments are external,with the exception of tools,which sold $400,000 to other segments,and Appliances,which sold $200,000 to other segments.
Required:
1.In applying the "revenue" test to identify reporting segments,what is the test value for Dashwood Corporation?
2.Using the "revenue" test,which of Dashwood's operating segments will also be reportable segments? (30) 
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