Exam 8: Segment and Interim Reporting

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available: Assuming Baker makes the change in the first quarter of 2011, how much is reported as net income for the first quarter of 2010?

Which of the following statements is true regarding the determination of operating segments in order to decide which segments will be separately reported?

Retro Corp. was engaged solely in manufacturing operations. The following data pertain to the operating segments for 2011: What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable?

How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement?

Describe the test to determine whether a sufficient number of operating segments are disclosed.

Which of the following statements is true?

For each of the following situations, select the best answer concerning segment disclosures of reportable segments. (A.) Required to be disclosed by an operating segment, but not a geographical segment. (B.) Required to be disclosed by a geographical segment, but not an operating segment. (C.) Required to be disclosed by both an operating segment and a geographical segment. (D.) Not required to be disclosed by either an operating segment or a geographical segment. ___ 1. Factors used to identify segments. ___ 2. Revenues from external customers. ___ 3. Types of products and services from which each segment derives its revenues. ___ 4. Names of major customers. ___ 5. Revenues from transactions with other segments. ___ 6. Interest revenue. ___ 7. Long-lived assets. ___ 8. Discontinued operations and extraordinary items, when applicable. ___ 9. Income tax expense or benefit. ___10. Revenues for the domestic country. ___11. Cash flow information

Which one of the following items is not required to be disclosed for each operating segment?

What approach is used, according to U.S. GAAP, for determination of how a business is divided into segments?

Which of the following is not true for an operating segment according to U.S. GAAP?

Harrison Company, Inc. began operations on January 1, 2010, and applied the LIFO method for inventory valuation. On June 10, 2011, Harrison adopted the FIFO method of accounting for inventory. Additional information is as follows: The LIFO method was applied during the first quarter of 2011 and the FIFO method was applied during the second quarter of 2011 in computing income, above. Harrison's effective income tax rate is 40 percent. Harrison has 500,000 shares of common stock outstanding at all times. Compute the after-tax effect of Harrison's change in inventory method.

The following information for Urbanski Corporation relates to the three months ending June 30, 2011: Urbanski uses the LIFO method to account for inventory, and expects at least 15,000 units to be on hand in the ending inventory at year-end. Purchases made in the last six months are expected to cost an average of $18 per unit. Prepare the journal entries to reflect the sales and cost of goods sold, assuming Urbanski does not expect to replace the liquidated inventory at year-end.

How are extraordinary gains reported in a third quarter interim financial report?

What is the appropriate treatment in an interim financial report for inventory that has market value below cost?

Kaycee Corporation's revenues for the year ended December 31, 2010, were as follows: Consolidated Revenue per the Income Statement: $1,200,000 Upstream Intersegment Sales: $180,000 Downstream Intersegment Sales: $60,000 For purposes of the Revenue Test, what amount will be used as the benchmark for determining whether a segment is reportable?

What is the appropriate treatment in an interim financial report for variances arising from the use of a standard costing system?

Gregor Inc. uses the LIFO cost-flow assumption to value inventory. Inventory for Gregor on January 1, 2011 was 100 units at a LIFO cost of $25 per unit. During the first quarter of 2011, 200 units were purchased costing an average of $40 per unit, and sales of 265 units at a retail price of $50 per unit were made. Assuming Gregor expects to replace the units of beginning inventory sold before the year-end at a cost of $41, what is the amount of cost of goods sold for the quarter ended March 31, 2011?

Faru Co. identified five industry segments: (1) plastics, (2) metals, (3) lumber, (4) paper, and (5) finance. Each of these segments had been consolidated appropriately by the company in producing its annual financial statements. Information describing each segment is presented below (in thousands). Prepare the asset test and determine which of these segments was separately reportable.

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available: Assuming Baker makes the change in the first quarter of 2011, compute net income per common share.

A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. Which of the following statement(s) is correct? (I.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance. (II)) If more than one set of organizational units exists, each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible. (III.) If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered.