otal assets 80,000 Current liabilitie

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Easy Company provided the following statement of financial position at year-end and income statement for the current year:

Current assets 130,000

Property, plant and equipment 500,000

Goodwill 100,000

Investment in associate 70,000

Total assets 80,000

Current liabilities 90,000

Noncurrent liabilities 60,000

Share capital 400,000

Retained earnings 250,000

Total liabilities and equity 800,000

Revenue 1,800,000

Cost of goods sold -1,200,000

Gross profit 600,000

Other income 60,000

Distribution cost -200,000

Administrative expenses -100,000

Other expenses -50,000

Finance cost -60,000

Share in profit of associate 10,000

Income before tax 260,000

Income tax expense -90,000

Net income 170,000

 * The entity is organized for management purposes into three major operating segments, namely furniture, stationery and computer products. There are other smaller operating segments.

External sales

Furniture 800,000
stationary 500,000
computer products 400,000
other segment 100,000

intersegment sales
Furniture 200,000
stationary 150,000
computer products 50,000
other segments 0

*the cost of goods sold, distribution cost, administrative expenses and finance cost can be allocated as 50% to furniture, 25% to stationery, 20% to computer products, and 5% to other segments.

*The cost of sales related to intersegment sales amounted to P240,000 to be allocated as 50% to furniture, 40% to stationery, and 10% to computer products.

*The segment assets and liabilities are as follows:

Furniture

Current asset 80,000

Property, plant and equipment 300,000

Good will 60,000

Total asset 440,000

current liabilities 45,000

noncurrent liabilities 30,000

total liabilities 75,000

Stationary

Current asset 40,000

Property, plant and equipment 100,000

Good will 30,000

Total asset 170,000

current liabilities 30,000

noncurrent liabilities 20,000

total liabilities 50,000

Computer products

Current asset 5,000

Property, plant and equipment 85,000

Good will 10,000

Total asset 100,000

current liabilities 8,000

noncurrent liabilities 7,000

total liabilities 15,000

others

Current asset 2,000

Property, plant and equipment 3,000

Good will 0

Total asset 5,000

current liabilities 1,000

noncurrent liabilities 2,000

total liabilities 3,000

The remaining assets and liabilities are general corporate assets and liabilities identified with the entity as a whole.

*The other income and other expenses are not allocated to the operating segments as a measure of profit or loss.

*The chief operating decision maker does not allocate income tax expense to reportable segments as a measure of profit or loss.

Required:

  • Prepare the disclosures required for operating segments.
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