Exam 15: Segment and Interim Financial Reporting

Jacana Company uses the LIFO inventory method.During the second quarter,Jacana experienced a 100-unit liquidation in its LIFO inventory at a LIFO cost of $430 per unit.Jacana considered the liquidation temporary and expects to replace the units in the third quarter at an estimated replacement cost of $460 a unit.The cost of goods sold computation in the interim report for the second quarter will

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.

Sandpiper Corporation paid $120,000 for annual property taxes on January 15,2014,and $20,000 for building repair costs on March 10,2014.Total repair expenses for the year were estimated to be $200,000,and are normally accrued during the year until incurred.What total amount of expense for these items was reported in Sandpiper's first quarter 2014 interim income statement?

Which one of the following operating segment disclosures is not required by GAAP?

For internal decision-making purposes,Geogh Corporation identifies its industry segments by geographical area.For 2014,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?

For an operating segment to be considered a reporting segment under the revenue threshold,its reported revenue must be 10% or more of

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.

Dott Corporation experienced a $100,000 extraordinary loss in the second quarter of 2014 in their East Coast operating segment.The loss should be recognized

Illiana Corporation has several accounting issues with respect to its interim financial statements for the first quarter of calendar 2014. 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.

Similar operating segments may be combined if the segments have similar economic characteristics.Which one of the following is a similar economic characteristic under GAAP?

Krull Corporation is preparing its interim financial statements for the third quarter of calendar 2014. The following trial balance information is available for third quarter: Additional information At the end of the year,Krull distributes annual employee bonuses and charitable donations that are estimated at $40,000,and $12,000,respectively.The cost of goods sold includes the liquidation of a $45,000 base layer in inventory that Krull will restore in the fourth quarter at a cost of $75,000.Effective corporate tax rate for 2014 is 32%. Required: Prepare Krull's interim income statement for the third quarter of calendar 2014.

GAAP requires disclosures for each reportable operating segment for each of the following,except for

On January 5,2014,Eagle Corporation paid $50,000 in real estate taxes for the calendar year.In March of 2014,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?

Which of the following is not a quantitative threshold for determining a reportable segment?

The following data relate to Elle Corporation's industry segments.(Elle HQ represents the corporate headquarters).All other segments are geographical sales segments. Required: 1.Prepare a report which reconciles the reportable segment profits to total consolidated profits assuming that corporate expenses are not allocated to the operating segments. 2.Prepare a report which reconciles the reportable segment profits to total consolidated profits assuming that corporate expenses are allocated evenly among the operating segments.

Snodberry Catering has five operating segments,as summarized below: Required: Determine which of the operating segments of Snodberry Catering are reportable segments for the period shown.

In general,GAAP encourages the identification of reportable segments based on the following:

How does GAAP view interim accounting periods?

Nettle Corporation is preparing its first quarterly interim report.It is subject to a corporate income tax rate of 20% on the first $50,000 of taxable income and 35% on taxable income above $50,000.Its estimated pretax accounting income for 2014,by quarter,is: Nettle expects to earn and receive operating income for the year and does not contemplate any changes in accounting procedures or principles that would affect its pretax accounting income. Required: 1.Determine Nettle's estimated effective tax rate for 2014. 2.Prepare a schedule to show Nettle's estimated net income for each quarter of 2014.

The accountant for Baxter Corporation has assigned most of the company's assets to its three segments as follows: The unassigned assets consist of $430,000 of unallocated goodwill and $270,000 of assets attached to the corporate headquarters.For internal decision-making purposes,goodwill is not assigned to the segments and the assets assigned to the corporate headquarters are allocated equally to the operating segments. Required: 1.What is the proper threshold value to use in determining which of the operating segments shown above are reporting segments? 2.Which of the operating segments are considered reporting segments?