Exam 15: Segment and Interim Financial Reporting

The following data relate to Falcon Corporation's industry segments: Required: 1.Which of Falcon's operating segments would be considered reporting segments under the "revenue" test? 2.Which of Falcon's operating segments would be considered reporting segments under the "asset" test?

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Question 1

Correct Answer:

Verified

Requirement 1
The test value is 10% of the combined revenues of all operating segments including intersegment revenues,or,10% × $835,000 or $83,500.Based on this test value,Refinery,Chemicals,and Solar Power would be the reporting segments because each of these segments has more than $83,500 in total sales.
Requirement 2
The test value is 10% of the combined identifiable assets or 10% × $2,400,000 or $240,000.Based on this test value,Oil Exploration,Refinery,Chemicals,and Solar Power would be the reporting segments because each of these segments has more than $240,000 in segment assets.

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 is the total amount of property tax and repair expense to be reported in Sandpiper's first quarter 2014 interim income statement?

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Question 2

Correct Answer:

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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?

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Question 3

Correct Answer:

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Requirement 1
GAAP allows the assets of the corporate headquarters to be included in the segments if the assets are included in the measure of the segment's assets that are reviewed by the chief operating decision maker.This interpretation would justify the exclusion of goodwill and inclusion of the corporate headquarters assets.The threshold value would be 10% times the sum of ($5,670,000 + $270,000)or $594,000.
Requirement 2
Using the criterion established in Requirement 1,Electronics and Hardware would both be considered reporting segments.Plumbing would not be a reporting segment because it falls below the $594,000 threshold value.($490,000 + $270,000/3 = $580,000).

The following table is provided in the disclosures for interim reporting by Bigg Company,regarding the location of their assets. Based on the table,which of the following statements is true?

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Question 4

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?

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Question 5

Management-approach-based segments are called operating segments.

(True/False)

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Question 6

The following data relate to Elle Corporation's industry segments.(Elle HQ represents the corporate headquarters).All other segments are geographical sales segments. Intersegment Income from 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.

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Question 7

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

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Question 8

Leotronix Corporation estimates its income by calendar quarter as follows for 2014: Income tax rates applicable to Leotronix: Required: Determine Leotronix's estimated effective tax rate.

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Question 9

How does GAAP view interim accounting periods?

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Question 10

For reporting purposes,a segment is considered material if its assets are 15 percent or more of the combined assets of all operating segments.

(True/False)

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Question 11

Cole Company has the following 2014 financial data: Cole Company should add segments if

(Multiple Choice)

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Question 12

What is the purpose of interim reporting?

(Multiple Choice)

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Question 13

A reconciliation between the segment data and the consolidated information must be provided for the total of the reportable segments' revenues and the reported consolidated revenues.

(True/False)

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Question 14

Jeale Corporation is preparing its interim financial statements for the third quarter of calendar 2014.The following information was provided for the preparation of the statements: Additional information: At the end of the year,Jeale accrues its annual pension and depreciation expenses which amount to $60,000 and $42,000,respectively. Required: Prepare Jeale's interim income statement for the third quarter of calendar year 2014.

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Question 15

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

(Multiple Choice)

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Question 16

What is the threshold for reporting a major customer?

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Question 17

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.

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Question 18

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

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Question 19

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.

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Question 20

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The following data relate to Falcon Corporation's industry segments: Required: 1.Which of Falcon's operating segments would be considered reporting segments under the "revenue" test? 2.Which of Falcon's operating segments would be considered reporting segments under the "asset" test?

The following table is provided in the disclosures for interim reporting by Bigg Company,regarding the location of their assets. Based on the table,which of the following statements is true?

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?

Management-approach-based segments are called operating segments.

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

Leotronix Corporation estimates its income by calendar quarter as follows for 2014: Income tax rates applicable to Leotronix: Required: Determine Leotronix's estimated effective tax rate.

How does GAAP view interim accounting periods?

For reporting purposes,a segment is considered material if its assets are 15 percent or more of the combined assets of all operating segments.

Cole Company has the following 2014 financial data: Cole Company should add segments if

What is the purpose of interim reporting?

A reconciliation between the segment data and the consolidated information must be provided for the total of the reportable segments' revenues and the reported consolidated revenues.

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

What is the threshold for reporting a major customer?

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.

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

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.

Business Combinations

Stock Investments - Investor Accounting and Reporting

An Introduction to Consolidated Financial Statements

Consolidated Techniques and Procedures

Intercompany Profit Transactions - Inventories

Intercompany Profit Transactions - Plant Assets

Intercompany Profit Transactions - Bonds

Consolidations - Changes in Ownership Interests

Indirect and Mutual Holdings

Subsidiary Preferred Stock, consolidated Earnings Per Share, and Consolidated Income Taxation

Consolidation Theories, push-Down Accounting, and Corporate Joint Ventures

Derivatives and Foreign Currency: Concepts and Common Transactions

Accounting for Derivatives and Hedging Activities

Foreign Currency Financial Statements

Partnerships - Formation,operations,and Changes in Ownership Interests

Partnership Liquidation

Corporate Liquidations and Reorganizations

An Introduction to Accounting for State and Local Governmental Units

Accounting for State and Local Governmental Units - Governmental Funds

Accounting for State and Local Governmental Units - Proprietary and Fiduciary Funds

Accounting for Not-For-Profit Organizations

Estates and Trusts

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