Exam 15: Segment and Interim Financial Reporting

If the LIFO method is used for inventory to reduce taxable income,the IRS requires the LIFO method to be used for financial reporting purposes.

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.

Which one of the following operating segment information items is not directly named by GAAP to be reconciled to consolidated totals?

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.

GAAP requires that segment information be reported

The Securities and Exchange Commission require that quarterly reports be prepared for the company's stockholders and for filing with the IRS.

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?

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

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

Enterprises must report segment information using the management approach to segmentation.

The estimated taxable income for Shebill Corporation on January 1,2014,was $80,000,$100,000,$100,000 and $120,000,respectively,for each of the four quarters of 2014.Shebill's estimated annual effective tax rate was 30%.During the second quarter of 2014,the estimated annual effective tax rate was increased to 34%.Given only this information,Shebill's second quarter income tax expense was

Pensions and corporate headquarters are all part of an operating segment.

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

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.

Enterprises must disclose the existence of major customers; the single customer that accounts for 10 percent or more of the enterprise's revenue.

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?

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?

Which of the following conditions would not indicate that two business segments should be classified as a single operating segment?

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.

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?