ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 13, Problem 13.14P
a
To determine
Enterprise disclosures: ASC 280 provides guidelines for enterprise wide disclosures in the financial statement to help users to understand risks and potential returns. ASC 280 established the term enterprise wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The segmental disclosure worksheet for C.
a
Expert Solution
Answer to Problem 13.14P
Segment profit or loss
| Apparel | Building | Chemical | Furniture | Machinery |
| $110,000 | $155,000 | $(5,000) | $(13,000) | $97,000 |
Explanation of Solution
1. Segment disclosure worksheet.
| Operating Segments | Corporate admin $ | Intersegment eliminations $ | Consolidate $ | ||||||
| Apparel $ | Building $ | Chemical $ | Furniture $ | Machinery $ | Combined $ | ||||
| Revenues: | |||||||||
| Sales: | |||||||||
| Non-affiliate | 870,000 | 750,000 | 55,000 | 95,000 | 180,000 | 1,950,000 | 1,950,000 | ||
| Intersegment. | 5,000 | 15,000 | 140,000 | 160,000 | (160,000) | ||||
| Total revenue | 870,000 | 750,000 | 60,000 | 110,000 | 320,000 | 2,110,000 | (160,000) | 1,950,000 | |
| Expenses: | |||||||||
| Cost of goods sold | (480,000) | (450,000) | (42,000) | (78,000) | (150,000) | (1,200,000) | 160,000 | (1,040,000) | |
| Selling expenses | (160,000) | (40,000) | (10,000) | (20,000) | (30,000) | (260,000) | (260,000) | ||
| Traceable expenses | (40,000) | (30,000) | (6,000) | (12,000) | (18,000) | (106,000) | (106,000) | ||
| Allocated expenses | (80,000) | (75,000) | (7,000) | (13,000) | (25,000) | (200,000) | (200,000) | ||
| Segment profits | 110,000 | 155,000 | (5,000) | (13,000) | 97,000 | 344,000 | 0 | 344,000 | |
| Unallocated general expenses | (35,000) | (35,000) | (35,000) | ||||||
| Income before tax | 110,000 | 155,000 | (5,000) | (13,000) | 97,000 | (35,000) | 309,000 | 0 | 309,000 |
| Assets: | |||||||||
| Segments | 610,000 | 560,000 | 80,000 | 90,000 | 140,000 | 1,480,000 | 1,480,000 | ||
| General corporate | 125,000 | 125,000 | 125,000 | ||||||
| Total Assets | 610,000 | 560,000 | 80,000 | 90,000 | 140,000 | 125,000 | 1,605,000 | 1,605,000 | |
Allocated costs:
b
To determine
Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in the financial statement to help users to understand risks and potential returns. ASC 280 established the term enterprise-wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The schedule showing which segments are separately reportable.
b
Expert Solution
Answer to Problem 13.14P
Only Apparel and Building are separately reportable
Explanation of Solution
Schedule showing reportable segments
Segment is reportable if segment revenue is greater than or equal to 10 percent
| Revenue | Profit | Assets | |||||||
| Segment | $,(000’s) | % | Reportable | $,(000’s) | % | Reportable | $,(000’s) | % | Reportable |
| Apparel | 870 | 45 | Yes | 110 | 32 | Yes | 610 | 41 | Yes |
| Building | 750 | 38 | Yes | 155 | 45 | Yes | 560 | 38 | Yes |
| Chemical | 55 | 3 | No | (5) | -1.5 | No | 80 | 5.4 | No |
| Furniture | 95 | 5 | No | (13) | -4 | No | 90 | 6 | No |
| Machinery | 180 | 9 | No | 97 | 28 | Yes | 140 | 9.5 | No |
| Total | 1,950 | 100 | 344 | 100 | 1,480 | 100 | |||
Therefore, only Apparel and Building are separately reportable.
c
To determine
Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in the financial statement to help users to understand risks and potential returns. ASC 280 established the term enterprise-wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The information about company’s operations in different industry segments as required by ASC 280.
c
Expert Solution
Answer to Problem 13.14P
Segment profit
| Apparel | Building | Machinery | Other | Consolidated |
| $110,000 | $155,000 | $97,000 | $(18,000) | $344,000 |
Explanation of Solution
| Operating Segments | ||||||
| Apparel $ | Building $ | Machinery $ | Other $ | Elimination $ | Consolidated $ | |
| Revenues: | ||||||
| Sales: | ||||||
| Non-affiliate | 870,000 | 750,000 | 180,000 | 150,000 | 1,950,000 | |
| Intersegment. | 140,000 | 20,000 | (160,000) | |||
| Total revenue | 870,000 | 750,000 | 320,000 | 170,000 | (160,000) | 1,950,000 |
| Expenses: | ||||||
| Segment profits | 110,000 | 155,000 | 97,000 | (18,000) | 344,000 | |
| Unallocated general expenses | (35,000) | |||||
| 309,000 | ||||||
| Assets: | ||||||
| Segments | 610,000 | 560,000 | 140,000 | 170,000 | 1,480,000 | |
| General corporate | 125,000 | |||||
| Total Assets | 1,605,000 | |||||
| Depreciation | 60,000 | 50,000 | 25,000 | 21,000 | 156,000 | |
| Capital expenditure | 20,000 | 30,000 | 15,000 | 0 | 65,000 | |
c
To determine
Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in the financial statement to help users to understand risks and potential returns. ASC 280 established the term enterprise-wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The information about company’s operations in different industry segments as required by ASC 280.
c
Expert Solution
Answer to Problem 13.14P
Apparel, Building and Machinery can be considered as separately reportable, if building segment had $460,000 in assets instead of $560,000 and furniture segment had $190,000 instead of $90,000.
Explanation of Solution
| Revenue | Segment Profit | Segment Assets | |
| Apparel | |||
| Building | |||
| Chemical | |||
| Furniture | |||
| Machinery |
Result of the 10 percent tests to determine if separately reportable:
| Revenue | Profit | Assets | |
| Apparel | Yes | Yes | Yes |
| Building | Yes | Yes | Yes |
| Chemical | No | No | No |
| Furniture | No | No | Yes |
| Machinery | Yes | Yes | No |
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ADVANCED FINANCIAL ACCOUNTING IA
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