Chapter 15 SEGMENT AND INTERIM FINANCIAL REPORTING

Answers to Questions 1 An operating segment is a component of an enterprise: ( ! t"at engages in #$siness acti%ities from &"ic" it ma' earn re%en$es an( inc$r e)penses* eit"er interna+ or e)terna+, (-! &"ose operating res$+ts are reg$+ar+' re%ie&e( #' t"e enterprise.s c"ief operating (ecision ma/er an( (0! for &"ic" (iscrete financia+ information is a%ai+a#+e1 A reporta#+e segment is an operating segment* eit"er sing+e or aggregate(* for &"ic" information "as to #e reporte( $n(er FASB ASC Topic 2801 An operating segment is a reporta#+e segment if (a! its re%en$e is 2 percent or more of t"e com#ine( re%en$e of a++ operating segments* (#! its a#so+$te operating profit or +oss is 2 percent or more of t"e greater of com#ine( operating profit of a++ segments t"at "a%e operating profit or com#ine( operating +osses of a++ segments t"at "a%e +osses* or (c! its i(entifia#+e assets are 2 percent or more of t"e com#ine( i(entifia#+e assets of a++ operating segments1 Segments not meeting one of t"ese tests are s$#3ect to a ree%a+$ation* an( possi#+e aggregation* if t"e com#ine( re%en$e from sa+es to e)terna+ c$stomers of a++ reporta#+e segments is +ess t"an 45 percent of conso+i(ate( re%en$e1 Segments t"at are not reporta#+e segments are com#ine( &it" ot"er #$siness acti%ities an( reporte( $n(er an 6a++ ot"er7 categor'1 T"e 2 percent re%en$e test app+ies to t"e 89:2*2221 Re%en$e for p$rposes of FASB ASC Topic 280 inc+$(es re%en$e from #ot" e)terna+ an( intersegment c$stomers1 An in($str' segment is a reporta#+e segment $n(er t"e 2 percent operating profit test if its operating profit or +oss* in a#so+$te amo$nt* e;$a+s or is greater t"an t"e greater of com#ine( operating profits for a++ operating segments "a%ing operating profits or t"e a#so+$te %a+$e of t"e com#ine( operating +osses for a++ operating segments "a%ing operating +osses1 A segment is a reporta#+e segment $n(er t"e 2 percent asset test if its assets are 2 percent or more of t"e com#ine( assets of a++ operating segments1 T"e a++ocation of genera+ corporate assets (epen(s on t"e interna+ operations of t"e enterprise1 T"e /e' is t"e asset fig$re gi%en to t"e c"ief operating (ecision ma/er on &"ic" "e or s"e e%a+$ates performance1 If corporate assets are not a++ocate(* t"e' #ecome part of t"e reconci+iation #et&een t"e reporta#+e segments. assets an( conso+i(ate( assets1 A segment is a reporta#+e segment $n(er t"e 2 percent re%en$e test if its intersegment an( e)terna+ sa+es is 2 percent or more of t"e com#ine( intersegment an( e)terna+ sa+es of a++ t"e operating segments1 No1 If t"e com#ine( re%en$e from sa+es to e)terna+ c$stomers is +ess t"an 45 percent of tota+ conso+i(ate( re%en$es* a((itiona+ operating segments m$st #e i(entifie( as reporta#+e segments $nti+ t"e 45 percent test is met1 Eit"er some of t"e remaining segments m$st #e aggregate(* if t"e' meet t"e aggregation criteria* so t"at t"e com#ine( segment meets t"e materia+it' criteria of 2<* or one or more of t"e fi%e operating segments t"at &ere not reporta#+e segments $n(er t"e 2 percent tests m$st #e i(entifie( as reporta#+e segments1

4 5

15-2

Segment and Interim Financial Reporting

T"e fo++o&ing information m$st #e (isc+ose( for reporta#+e segments an( for t"e remain(er of t"e enterprise.s operating segments an( ot"er #$siness acti%ities in t"e aggregate: a Re%en$e* &it" separate amo$nts to $naffi+iate( an( affi+iate( c$stomers* an( (isc+os$re of t"e #asis of acco$nting for intersegment sa+es1 b Operating profit or +oss* #ase( on t"e information re%ie&e( #' t"e c"ief operating officer1 c I(entifia#+e assets for eac" reporta#+e segment1 d Interest re%en$e e Interest e)pense f Aggregate amo$nt of (epreciation* (ep+etion* an( amorti=ation e)pense1 g >n$s$a+ items as (escri#e( in paragrap" -? of AP@ Opinion No1 021 h E;$it' in t"e net income of in%estees acco$nte( for #' t"e e;$it' met"o(1 i Income ta) e)pense or #enefit1 j E)traor(inar' items1 k Significant noncas" items ot"er t"an (epreciation* (ep+etion* an( amorti=ation1 If t"e enterprise is segmente( on a geograp"ic #asis* comp+ete segment information &o$+( #e s$pp+ie( #' co$ntr' of operation1 If a (ifferent criteria is $se( for segmentation* more +imite( geograp"ic information is s$pp+ie(1 Re%en$es an( +ong +i%e( assets attri#$te( to t"e co$ntr' of (omici+e an( a++ foreign operations are (isc+ose(1 An' sing+e co$ntr' &it" materia+ operations m$st a+so #e (isc+ose( separate+'1 T"e fact of an( t"e amo$nt of re%en$e from eac" c$stomer m$st #e (isc+ose( if 2 percent or more of an enterprise.s re%en$e is (eri%e( from t"at c$stomer1 If 2 percent or more of an enterprise.s re%en$e is (eri%e( from sa+es to t"e fe(era+ go%ernment* or to a state* +oca+* or foreign go%ernmenta+ $nit* t"at fact an( t"e amo$nt of re%en$e m$st #e (isc+ose(1 T"e i(entit' of t"e segment ma/ing s$c" sa+es m$st #e (isc+ose(* #$t t"e c$stomer nee( not #e i(entifie( #' name1 T"e re;$irements of FASB ASC Topic 280 (o app+' to interim financia+ statements1 Li/e ot"er aspects of interim reporting* segment (isc+os$re is more +imite( in t"e interim reports t"an in t"e ann$a+ reports1 Re;$ire( (isc+os$re for eac" reporta#+e segment in t"e interim reports inc+$(e: ( ! re%en$es from e)terna+ c$stomers* (-! intersegment re%en$es* (0! a meas$re of segment profit or +oss* (9! tota+ assets for &"ic" t"ere "as #een a materia+ c"ange since t"e amo$nt (isc+ose( in t"e ann$a+ report* (5! a (escription of an' c"anges in t"e #asis for segmentation or t"e #asis of meas$rement of segment profit or +oss* (?! a reconci+iation of tota+ reporta#+e segment profit or +oss an( conso+i(ate( income #efore income ta)es1 An ann$a+ effecti%e ta) rate is comp$te( as t"e s$m of estimate( income ta)es for eac" ;$arter of t"e 'ear* (i%i(e( #' t"e estimate( income for t"e 'ear1 T"is approac" sprea(s an' progression in ta) rates o%er t"e entire 'ear in accor(ance &it" t"e integra+ t"eor' of interim reporting1 T"e (iscrete t"eor' ass$mes t"at eac" ;$arter is a separate an( in(epen(ent acco$nting perio( t"at stan(s a+one1 @' contrast* t"e integra+ t"eor' treats eac" interim perio( as an essentia+ part of eac" ann$a+ perio(1 T"e integra+ t"eor' is re;$ire( $n(er GAAP reporting for interim reports1 FASB ASC Topic 270 specifies t"at minim$m (isc+os$res for interim reports s"o$+( inc+$(e gross re%en$es* pro%ision for income ta)es* e)traor(inar' items an( c$m$+ati%eAeffectAt'pe c"anges on a netAofAta) #asis* an( net income an( re+ate( EPS amo$nts as #asic reporting items1 In a((ition* (isc+os$res are re;$ire( of seasona+ cost an( re%en$e* significant c"anges in income ta) estimates* or c"anges in financia+ position* an( materia+ contingencies* e)traor(inar' an( $n$s$a+ or infre;$ent+' occ$rring items1

11

12

13

14

15

Chapter 15

15-3

SOLUTIONS TO EXERCISES Solution E15-1 1 2 3 d a d 4 5 6 b d b

Solution E15-2 1 Revenue tests

10% revenue test : Con rete and stone produ ts Constru tion $umber and %ood produ ts 'uilding materials (t)er 75% revenue test : Combined Revenue from Reportable Segments to Unaffiliated Customers Con rete and stone produ ts Constru tion $umber and %ood produ ts 'uilding materials (t)er $ ",000,000 ",000,000 *00,000 $ +,*00,000 Combined Revenue from All Segments to Unaffiliated Customers $ 400,000 ",000,000 ",000,000 *00,000 "00,000 $ 3,"00,000 Revenue from Affiliated and Unaffiliated Customers $ 400,000 ",000,000 ",&00,000 ",000,000 "00,000 $4,300,000 Reportable Segment Test Value $430,000 !o #es #es #es !o

Sin e t)e $+,*00,000 ombined revenue from reportable segments to unaffiliated ustomers is greater t)an ,-. of $3,"00,000 revenue for all unaffiliated ustomers, no additional segments )ave to be reported/ 2 S )edule for dis losing revenue b0 segment: $umber Constru tion and 1ood Unaffiliated sales Affiliated sales Total Sales 3 'uilding (t)er Totals

$",000,000 $",000,000 $*00,000 $"00,000 $+,,00,000 $&00,000 $400,000 ",+00,000 $",000,000 $",&00,000 $",000,000 $"00,000 $3,200,000 orporate revenue $3,200,000 400,000 4",+00,0005 $3,"00,000

Re on iliation of segment revenue to Total revenue of reportable segments (t)er revenue 3liminations of intersegment revenue Total onsolidated revenue

15-4

Segment and Interim Financial Reporting

Solution E15-3 Revenue test: "0. of ombined revenues 4total sales5 6 $34,400

T)e food servi e industr0, opper mine, and )emi al industr0 are reportable segments under t)e revenue test be ause t)e0 ea ) )ave revenue in e7 ess of $34,400/ Operating profit test: "0. of t)e greater of t)e ombined operating profit of all industries )aving operating profit 4$44,+-05 or t)e ombined operating loss of all industries )aving operating losses 4$"+,,-05/ T)e food servi e industr0, opper mine, )emi al industr0, and agri ultural produ ts industr0 are reportable segments be ause t)e0 ea ) )ave operating profit or loss in e7 ess of $4,4+-/ Asset test: "0. of ombined assets 4$3"2,000 total assets less $"*,-00 orporate assets5 6 $30,+-0/ T)e food servi e industr0 and )emi al industr0 are reportable segments be ause t)e0 )ave assets in e7 ess of $30,+-0/ Reportable segments 4t)ose t)at meet at least one of t)e tests5: food servi e industr0, opper mine, )emi al industr0, and agri ultural produ ts industr0/ Solution E15-4 Wow Corporation Segment Revenue for +0"" (in thousands) United States $"00,000 30,000 $"30,000 Canada $3*,000 "*,000 $-+,000 (t)er 8oreign $4+,000 &,000 $-0,000

Sales to unaffiliated 9ntersegment sales Total

ustomers

Sin e revenue from reportable operating segments of $"3*,000 is greater t)an ,-. of onsolidated revenue 4$",&,0005, no additional segments need be reported/ Revenue Re on iliation: Reportable Segments (t)er segments 9ntersegment revenue Consolidated revenue $"&+,000 -0,000 4-4,0005 $",&,000

Chapter 15

15-5

Solution E15-5 1

:A9C;A adapted< 9ndustries A, ', C, and 3 9ndustries A, ', C, and 3 9ndustries A, ', C, =,

Revenue test value 6 $3,+,-

Operating profit test value 6 $-&0

Identifiable assets test value 6 $*,,-0 and 3 2 3 d Ten per ent of

ombined revenues of all industr0 segments/

b Revenue test value: "0. of sales to unaffiliated 4$4,0005 and affiliated 4$",+005 ustomers 6 $-+0 b (nl0 'e > and =? )ave total revenues "0. of $"**,000 revenues: 'e > $+4,000 total revenue @ $"*,*00 =? $""&,000 total revenue @ $"*,*00 ombined

d 9f sales to a single ustomer total "0. or more of ?umAs reported revenues 4$-0,000,000 "0.5, maBor ustomer data s)ould be dis losed/ a 9f revenues generated b0 foreign operations in one ountr0 are material 4"0. or more5 of onsolidated revenue, ?um s)ould report information about t)at ountr0As foreign operations/ T)e materialit0 riteria for reporting a segment based on revenue is "0 per ent of total 4bot) e7ternal and intersegment, eliminating ans%er b5 revenue 4not in ome, eliminating ans%er a5 of all operating segments 4not Bust t)ose reporting a profit, eliminating ans%er d5/ b Sales to ot)er segments are al%a0s in luded in segment in ome/ T)e ot)er t)ree options generall0 %ould not be in luded but an0 of t)em ould be in luded/ 9n lusion %ould depend on %)et)er it %as in luded in t)e performan e report evaluated b0 t)e )ief operating de ision ma>er/

15-6

Segment and Interim Financial Reporting

Solution E15-6 1 Capan is t)e onl0 foreign segment t)at )as segmental revenues 4in luding intersegment revenues5 of over "0. of total segment revenues of $*3,000/ 2 United States Canada ?erman0 Capan Ee7i o (t)er foreign Total foreign Assets $-0,000 ,,-00 &,-00 2,000 +,000 ",-00 $,&,-00 @ D @ @ D Test Value $,,&-0 $,,&-0 ,,&-0 ,,&-0 ,,&-0 Reportable ?eograp)i 0es no 0es 0es no Area

T)e test value to determine reportabilit0 is "0 per ent of onsolidated segment assets of $,&,-00/ 3 b United States on all t)ree tests, Capan on t)e revenue and asset tests, and ?erman0 on t)e operating profit and asset tests/

Solution E15-7 1 2 3 d 9n ome 0ear to date Ta7 rate $ess: Ta7 in prior return periods Fuarterl0 period ta7 e7pense 4 "st Fuarter $+40,000 34. &",*00 0 $ &",*00 +nd Fuarter $4+0,000 30. "+*,000 &",*00 $ 44,400 d

a 3stimated total ta7es of $+*,"-0 $""0,000 estimated preta7 in ome 6 +3/,,.

Solution E15Ent Corporation S )edule of 9n ome b0 Fuarter for +0"" "st Fuarter $30,000 $30,000 4&,3-05 $+",*-0
omputations:

9n ome 0earGtoGdate Fuarterl0 period in ome 9n ome ta7 e7penseH !et in ome
H 9n ome ta7 e7pense "st Fuarter

+nd Fuarter $,0,000 $40,000 4"","335 $+&,&*,

3rd Fuarter $""0,000 $ 40,000 4"","335 $ +&,&*,

4t) Fuarter $"-0,000 $ 40,000 4"","345 $ +&,&**

#ear +0"" $"-0,000 $"-0,000 44",,-05 $"0&,+-0

$30,000 /+,&333 6 $&,3-0

Chapter 15 +nd Fuarter 3rd Fuarter 4t) Fuarter $,0,000 /+,&333 6 $"2,4&3 G $&,3-0 6 $"","33 $""0,000 /+,&333 6 $30,*"* G $"2,4&3 6 $"","33 $"-0,000 /+,&333 6 $4",,-0 G $30,*"* 6 $"","34

15-7

15-8

Segment and Interim Financial Reporting

Solution E15-! :'ased on A9C;A< 1 b T)e inventor0 loss %as not e7pe ted to be temporar0, and t)erefore, t)e de line %as re ogniIed in t)e first period/ T)e subseJuent re over0 to t)e original ost is re ogniIed in t)e t)ird period/ b T)e e7traordinar0 loss of $,0,000 )as to be dis losed, and t)e annual insuran e premium )as to be allo ated $+-,000 per Juarter/ d T)e full $3*0,000 loss is in luded in t)e se ond Juarter interim report be ause t)e loss is permanent/ a An e7traordinar0 loss is allo ated to t)e Juarter to %)i ) it relates/ 9n t)is ase t)e $300,000 e7traordinar0 loss is assigned to t)e t)ird Juarter/ a Under t)e integral t)eor0 ea ) Juarterl0 period is an integral part of ea ) annual period/ T)us, propert0 ta7es of $+0,000 4$&0,000 +-.5 and e7e utive bonuses of $&0,000 4$3+0,000 +-.5 s)ould be allo ated to ea ) of t)e four Juarters/

Solution E15-1" Current ost to repla e 4,000 units at $, Kistori al ost of inventor0 liJuidated 4,000 units at $AdBustment to Cost of sales AdBusted ost of sales :4,000 units 4$, G $-5< $ +&,000 +0,000 &,000 --0,000 $--&,000

ost of sales for t)e first Juarter

Chapter 15

15-9

SOLUTIONS TO #RO$LE%S Solution #15-1 1 Reportable segments under t)e "0. revenue test: Test value is "0. of $","-&,000 total sales, or $""-,&00/ Reportable industr0 segments in lude t)e apparel, furniture, lumber and %ood produ ts, and te7tiles segments/ 2 Test value for ,-. revenue test is t)e ombined revenue from sales to unaffiliated ustomers b0 all industr0 segments of $&2+,000 ,-. 6 Reportable segments: Apparel 8urniture $umber and %ood produ ts Te7tiles Total

$**2,000 $"*4,000 +0&,000 ",-,000 -0,000 $-2,,000

Sales to unaffiliated ustomers b0 t)e reportable industr0 segments of $-2,,000 is less t)an t)e $**2,000 test value/ T)erefore, additional segments must be identified as reportable segments/ T)e onstru tion industr0, as losest to t)e "0. riteria, s)ould be in luded as a reportable segment/ 3 Under t)e assumption t)at toba o and paper s)are t)e maBorit0 of t)eir operating )ara teristi s t)e0 %ould be ombined into one segment t)at no% meets t)e "0. test and omplies %it) t)e ,-. riteria/ Constru tion %ould no longer need to be reported/ !ote to dis lose information about segment data: Sales to Unaffiliated Customers $ "*4,000 "&3,000 +0&,000 ",-,000 -0,000 ""+,000 $ &2+,000 Sales to Affiliated Customers GGG $ *,000 20,000 ",0,000 GGG $+**,000

Apparel Toba o and paper 8urniture $umber and %ood produ ts Te7tiles (t)er segments Total revenue

Total Sales $ "*4,000 "&3,000 +"4,000 +*-,000 ++0,000 ""+,000 $","-&,000

Re on iliation of Segment Revenue to Consolidated Revenue: Reportable segment revenue (t)er revenue 9ntersegment revenue Consolidated revenue $",04*,000 ""+,000 4+**,0005 $ &2+,000

15-1

Segment and Interim Financial Reporting

Solution #15-2 1 Reportable segments Revenue test 4$*00,000 L $"0-,0005 "0. 6 $,0,-00 Reportable segments: 8ood C)emi al 'everages $3-0,000 $"-0,000 $ ,+,000 $ 4-,000 $ +3,000 $ "&,000 $3"0,000 $"-0,000

Operating profit test 4$&-,000 L $"0,0005 "0. 6 $2,-00 Reportable segments: 8ood C)emi al 'everages Asset test $*4-,000 "0. 6 $*4,-00 Reportable segments: 2 Reportable segments test Test value $*00,000 Unaffiliated sales: onsolidated sales ,-. 6 $4-0,000 8ood C)emi al 'everages Total 8ood C)emi al

$300,000 ""0,000 *+,000 $4,+,000

Sales b0 reportable segments 4$4,+,0005 are greater t)an t)e $4-0,000 test value and no additional reportable segments are reJuired/

Chapter 15

15-11

Solution #15-3 1 (perating segments 4foreign geograp)i Revenue test Revenue $ +4,000 +0,000 ++,000 +-,000 "42,000 $+40,000 Test Value 4$+40,000 "0.5 $+4,000 +4,000 +4,000 +4,000 +4,000 Reportable ?eograp)i Area 0es no no 0es 0es areas5:

Canada Ee7i o 'raIil Sout) Afri a United States Asset test

D D

Canada Ee7i o 'raIil Sout) Afri a United States

a

Assets $ 30,000 "2,000 +0,000 3",000 "-0,000

D D

Test Valuea 4$+-0,000 "0.5 $+-,000 +-,000 +-,000 +-,000 +-,000

Reportable 0es no no 0es 0es

Total segment assets 6 $+-0,000/

rofit test ;rofit $ *,000 &,000 -,000 ,,000 +4,000 Test Valuea 4$-0,000 "0.5 $-,000 -,000 -,000 -,000 -,000 Reportable 0es 0es 0es 0es 0es

Canada Ee7i o 'raIil Sout) Afri a United States

a

Total segment profits 6 $-0,000/

All five geograp)i segments 4Canada, Ee7i o, 'raIil, Sout) Afri a, and t)e United States5 are reportable segments/

15-12

Segment and Interim Financial Reporting

Solution #15-3 4 ontinued5 3 &a# Corporation S )edule of (perations in =ifferent ?eograp)i Segments for t)e 0ear ended =e ember 3", +0""
United States Sales to unaffilG iated ustomers 9ntersegment transfers Total revenue (perating profit 9dentifiable assets Re on iliations: Revenue: Total revenue of reportable segments (t)er revenues 3limination of intersegment revenues Total onsolidated revenues ;rofit or $oss: Total profit or loss for reportable segments (t)er profit or loss 3limination of intersegment profit and loss Unallo ated amounts Consolidated in ome before ta7es Assets: Total assets for reportable segments (t)er assets Consolidated total $+40,000 0 4-0,000 5 $"20,000 $ -0,000 0 0 0 $ -0,000 $+-0,000 0 $+-0,000 $"+0,000 +2,000 $"42,000 $ +4,000 $"-0,000 Ee7i o $+0,000 $+0,000 $ &,000 $"2,000 'raIil $++,000 $++,000 $ -,000 $+0,000 Sout) Afri a $"-,000 "0,000 $+-,000 $ ,,000 $3",000 Canada $"3,000 "",000 $+4,000 $ *,000 $30,000 Total $"20,000 -0,000 $+40,000 $ -0,000 $+-0,000

Chapter 15

15-13

Solution #15-4 1 Reportable segments: Revenue test Sales to Affiliated and Unaffiliated Customers Test Value 8oods $ +"0 D $+40 Soft drin>s ",0*0 +40 =istilled spirits -,0 +40 Cosmeti s +00 D +40 ;a >aging "+0 D +40 (t)er 44 minor segments5 +40 Total revenue $+,400 75% revenue test Sales to Unaffiliated Customers Reportable All Segments Segments $ "&0 $ 200 200 --0 --0 +00 ""0 +40 $",4-0 $+,"&0 Reportable Segment no 0es 0es no no

8oods Soft drin>s =istilled spirits Cosmeti s ;a >aging (t)er 44 minor segments5

Sin e $",4-0 D 4,-. $+,"&05, ot)er reportable segments must be identified to bring t)e total revenue from unaffiliated ustomers for reportable segments up to $",*3-/ 9f no furt)er aggregation is possible, a logi al approa ) is to in lude osmeti s, t)e ne7t largest segment in terms of sales to unaffiliated ustomers/ 9f furt)er aggregation of some of t)e ot)er%ise nonG reportable segments %ere possible 4t)e0 met t)e maBorit0 of t)e aggregation riteria5, a ombined segment ma0 t)en meet t)e reportabilit0 riteria and %ould be reported instead of osmeti s/ T)e test: $200 L $--0 L $+00 6 $",*-0 Sin e $",*-0 @ $",*3-, t)e reportable segments are soft drin>s, distilled spirits, and osmeti s/

15-14

Segment and Interim Financial Reporting

Solution #15-4 4 ontinued5 2 %'r Corporation S )edule of Sales to Affiliated and Unaffiliated Customers b0 Segments for t)e 0ear ended =e ember 3", +0"" Soft =rin>s Sales to unaffiliated ustomers Sales to affiliated ustomers Total revenue Re on iliation: Revenue from reportable segments (t)er revenue 3limination of inter ompan0 revenue Consolidated revenue 3 $",&30 -,0 4++05 $+,"&0 $ 200 "*0 $",0*0 =istilled Spirits $--0 +0 $-,0 $+00 Cosmeti s $+00 (t)er Segments $-30 40 $-,0 Totals $+,"&0 ++0 $+,400

%'r Corporation =is losure of Revenue from =omesti and 8oreign (perations for t)e 0ear ended =e ember 3", +0"" Sales to unaffiliated 9nterarea sales Total revenue ustomers United States $",&-0 +00 $+,0-0 Total 8oreign $330 +0 $3-0 Capan $+-0 $+-0

Chapter 15

15-15

Solution #15-5 1 Reportable segments: Revenue test 9dentified Segment Revenues $",,000 ",,000 ,,000 +*,000 ,,000 $,4,000 Test Value $,,400 ,,400 ,,400 ,,400 ,,400 Reportable Segment 0es 0es no 0es no

8ood Toba o $umber Te7tiles 8urniture

D D

Operating profit test 'efore Ta7 ;rofit $ +,000 4,000 3,000 ",-00 $"0,-00 (perating $oss D Test Value $",0-0 ",0-0 ",0-0 ",0-0 ",0-0 Reportable Segment 0es 0es no 0es 0es

8ood Toba o $umber Te7tiles 8urniture Asset test

$4-005

$4-005

8ood Toba o $umber Te7tiles 8urniture 2 8ood, toba segments/

9dentifiable Assets $"2,000 +",000 *,000 ++,000 ,,000 $,-,000

D D

Test Value $,,-00 ,,-00 ,,-00 ,,-00 ,,-00

Reportable Segment 0es 0es no 0es no

o, te7tile, and furniture segments are reportable

15-16

Segment and Interim Financial Reporting

Solution #15-5 4 ontinued5 3 8ood Toba o $umber Te7tiles 8urniture Sales to Unaffiliated Customers Reportable All Segments Segments $"+,000 $"+,000 "0,000 "0,000 ,,000 "&,000 "&,000 ,,000 ,,000 $4,,000 $-4,000

Sin e t)e $4,,000 revenue from unaffiliated ustomers of previousl0 identified reportable operating segments is greater t)an ,-. onsolidated revenue 4,-. $-4,000 6 $40,-005, no additional reportable segments )ave to be identified/ 4 Ra( Co)pan* S )edule of (perations in =ifferent Segments for t)e 0ear ended =e ember 3", +0""
8ood Revenues Sales to unaffiliG ated ustomers Sales to affiliated Customers Segment revenue Operating profit Segment operating ;rofit Assets 9dentifiable assets =epre iation $"+,000 -,000 $",,000 $ 4,000 $"&,000 $ ",000 Toba o Te7tiles $"&,000 &,000 $+*,000 $ -,000 $++,000 $ 3,000 8urniG ture $,,000 $,,000 $",-00 $,,000 $ -00 (t)er $,,000 $,,000 $ 4-005 $*,000 $+,-00 Total $-4,000 +0,000 $,4,000 $"4,000 $,+,000 $ 2,000

$"0,000 ,,000 $",,000 $ 4,000 $"2,000 $ +,000

R'+on+iliation o, r'-'nu'. Revenue from reportable segments Revenue from eJuit0 investees (t)er revenue 9ntersegment eliminations Consolidated revenue R'+on+iliation o, in+o)'. Reportable segment in ome 9n ome from eJuit0 investees (t)er in ome 9nterest e7pense Consolidated in ome before ta7es R'+on+iliation o, a//'t/. Reportable segment assets (t)er segment assets 9nvestment in eJuit0 affiliates Corporate assets Consolidated assets

$ *,,000 2,000 ,,000 4+0,000 5 $ *3,000 $ "4,-00 2,000 4-005 4,,000 5 $ "*,000 $ **,000 *,000 *0,000 4,000 $"3*,000

Chapter 15

15-17

Solution #15-6 Tut Corporation S )edule of =is losures for 9ndustr0 Segments for t)e 0ear ended =e ember 3", +0"" C)emi al Segment Revenue Sales to unaffiliated ustomers 9ntersegment sales Total sales !"penses Cost of sales ?eneral e7penses Selling e7penses 9nterest e7pense Total e7penses Segment operating profit Assets $"+-,000 3-,000 "*0,000 $ &0,000 "-,000 +0,000 -,000 "+0,000 $ 40,000 $+00,000 8ood Segment $""-,000 +-,000 "40,000 $ ,0,000 "0,000 "-,000 2-,000 $ 4-,000 $"&0,000 =rug Segment $"+0,000 "+0,000 $ *0,000 "0,000 "-,000 -,000 20,000 $ 30,000 $"-0,000 $ Totals $3*0,000 *0,000 4+0,000

"+-,000 $-30,000 4+0,000 30,000 "0,000 4*0,0005 400,000 ""-,000 30,000 "0,000 4-,0005 4"-,0005 430,0005 "0-,000

R'+on+iliation o, r'-'nu'. Revenue from reportable segments Revenue from eJuit0 investees 9nterest revenue 9ntersegment eliminations Consolidated revenue R'+on+iliation o, in+o)'. Reportable segment in ome 9n ome from eJuit0 investees 9nterest in ome Corporate e7pense Einorit0 interest in ome 9ntersegment eliminations Consolidated in ome before ta7es R'+on+iliation o, a//'t/. Reportable segment assets 9nvestment in eJuit0 affiliates Corporate assets 3limination of intersegment balan es Consolidated assets

$ $

$ $

-30,000 300,000 +00,000 430,0005 $",000,000

15-18

Segment and Interim Financial Reporting

Solution #15-7 1 Reportable segments Revenue test 9ndustr0 Segment Revenue $",0"0,000 -*0,000 330,000 400,000 $+,300,000 Test Value 4"0. $+,300,0005 $+30,000 +30,000 +30,000 (perating Reportable Segment 0es 0es 0es

Segment 8ood ;a >ing Te7tile All ot)er

Operating profit test Segment 8ood ;a >ing Te7tile All ot)er Asset test (perating Assets $ ,-0,000 -00,000 3-0,000 400,000 $+,000,000 Segment Test Value 4"0. $+,000,0005 $+00,000 +00,000 +00,000 Reportable Segment #es #es #es (perating ;rofit $""0,000 ""0,000 -,000 ,-,000 $300,000 D Test Value 4"0. $300,0005 $30,000 30,000 30,000 Reportable Segment #es #es !o

Segment 8ood ;a >ing Te7tile All ot)er

Chapter 15

15-19

Solution #15-7 4 ontinued5 2 Co0 Co)pan* (perations in =ifferent Segments at or for t)e 0ear ended =e ember 3", +0"" (#ata in $housands of #ollars)
8ood 9ndustr0 Revenues Sales to unaffiliG ated ustomers 9ntersegment sales at mar>et Total Segment Sales Operating profit Segment operating ;rofit 9n ome before ta7es Assets 9dentifiable assets $ 2-0 *0 $",0"0 ;a >ing 9ndustr0 $-00 *0 $-*0 Te7tile Segments $300 30 $330 8oreign (peration $+-0 -0 $300 $400 All (t)er $400 Totals $+,400 +00 $+,*00

$ $ $

""0 ""0 ,00

$""0 $""0 $-00

$ $

$ +$ +$+00

$ ,$ ,$400 $ 3+-

$3+-

$+,"+-

R'+on+iliation o, r'-'nu'. Revenue from reportable segments (t)er segment revenue 9ntersegment eliminations 9n ome from eJuit0 investees Consolidated revenue R'+on+iliation o, in+o)'. Reportable segment in ome (t)er segment in ome 9n ome from eJuit0 investees 9nterest e7pense Corporate e7pense Consolidated in ome before ta7es R'+on+iliation o, a//'t/. Reportable segment assets (t)er segment assets 9nvestment in eJuit0 affiliates Corporate assets Consolidated assets

$+,+00 400 4+005 "00 $+,-00 $ +-0 ,"00 4+05 4+-5 3&0

$",,+400 ",000 -0 $3,",-

15-2

Segment and Interim Financial Reporting

Solution #15Tor Corporation S )edule of 9n ome b0 Fuarter for +0"" 1 8irst $-0,000 +0. Remainder 4$"*0,000 M -0,0005 34. $ess amount subBe t to dividends re eived dedu tion 4$+0,000 &0. 34.5 Total ta7 for t)e 0ear Total 9n ome 3ffe tive ta7 rate 2 9n ome 0earGtoGdate Fuarterl0 period in ome 9n ome ta7 e7penseH !et in ome
H 9n ome ta7 e7pense "st +nd 3rd 4t) Fuarter Fuarter Fuarter Fuarter

$ "0,000 3,,400 4-,4405 $ 4",2*0 $"*0,000 +*/++-.

"st Fuarter $+0,000 $+0,000 4-,+4-5 $"4,,--

+nd Fuarter $-0,000 $30,000 4,,&*&5 $++,"3+

3rd Fuarter $""0,000

4t) Fuarter $"*0,000

#ear +0"" $"*0,000

$ *0,000 $ -0,000 $"*0,000 4"-,,345 4"3,""35 44",2*05 $ 44,+** $ 3*,&&, $""&,040

omputations:

$+0,000 /+*++- 6 $-,+4$-0,000 /+*++- 6 $"3,""3 G $-,+4- 6 $,,&*& $""0,000 /+*++- 6 $+&,&4, G $"3,""3 6 $"-,,34 $"*0,000 /+*++- 6 $4",2*0 G $+&,&4, 6 $"3,""3