Resource Allocation and Segments

832 WordsApr 18, 20124 Pages
MEMORANDUM To: Dr. John J. Morris, Department of Accounting From: Group #9 (Sydney Case, Hannah Peterson, Kassidy Frederick) Date: April 3, 2012 Subject: Acctg 642: Case 08-5 Sell-it Products Inc. Statement of Facts Sell-it Products Inc. manufactures, markets, and distributes consumer products. It has been brought to their attention that the SEC is questioning their reportable segments it disclosed in their Annual Report. Below are the relevant facts: • Sell-it Products sells their products through grocery stores, drug stores, and mass merchandisers. • The continents these products are sold in include the North America, Asia, and Europe. • SPI is organized in three divisions with the following products:…show more content…
The nature of the products and services ii. The nature of the production processes iii. The type or class of customer for their products and services iv. The methods used to distribute their products or provide their services v. If applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities. c) Beauty care products should not be aggregated, because it does not meet criteria iii under ASC 280-10-50-11. Shampoo is a hygiene product while cosmetics are used to enhance appearance. Cosmetics are marketed more toward women. Family care products should not be aggregated, because it does not meet criteria iii under ASC 280-10-50-11. Diapers have a specific target market (babies and elderly), while paper towels are an everyday household item. Drinks and Snacks products could be aggregated because they meet all the criteria under ASC 280-10-50-11. d) ASC 280-10-50-12 explains the quantitative thresholds to be applied to each operating segment. Only one of the criteria from this section applies. i. Its reported revenue is at least 10 percent of the combined revenue of all operating segments. e) According to ASC 280-10-50-12 the only three segments that met the criteria were cosmetics, paper towels, and drinks and snacks products (aggregated together). They have
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