Prepare the reconciliations between segment information and amount shown in the entity's financial statements. Colorway Inc. had total assets of P65,000,000 at year end and provided the followingcondensed income statement for the current year:Sales45,000,000Expenses(33,000,000)Income before income tax12,000,000Income tax expense(3,800,000)Net Income8,200,000The entity has two reportable segments and has developed the following relatedinformation:Segment ASegment BOthersSales25,000,00015,000,0005,000,000Segment expenses18,000,0009,000,0004,000,000Segment assets35,000,00018,000,0007,000,000The total assets of P65,000,000 include general corporate assets ofP5,000,000.The total segment expenses of P33,000,000 include general corporate expenses ofP2,000,000.The chief operating decision maker does not allocate income tax as a measure ofprofit or loss.Required:1 Prepare the necessary disclosures for Colorway Inc. in relation to operating segments.2 Prepare the reconciliations between segment information and amount shown in theentity's financial statements.

Segment reporting is one of the important concept used in financial reporting. Under this, some…

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Prepare the reconciliations between segment information and amount shown in the entity's financial statements.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 24E

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Question

Prepare the reconciliations between segment information and amount shown in the entity's financial statements.

Colorway Inc. had total assets of P65,000,000 at year end and provided the following
condensed income statement for the current year:
Sales
45,000,000
Expenses
(33,000,000)
Income before income tax
12,000,000
Income tax expense
(3,800,000)
Net Income
8,200,000
The entity has two reportable segments and has developed the following related
information:
Segment A
Segment B
Others
Sales
25,000,000
15,000,000
5,000,000
Segment expenses
18,000,000
9,000,000
4,000,000
Segment assets
35,000,000
18,000,000
7,000,000
The total assets of P65,000,000 include general corporate assets of
P5,000,000.
The total segment expenses of P33,000,000 include general corporate expenses of
P2,000,000.
The chief operating decision maker does not allocate income tax as a measure of
profit or loss.
Required:
1 Prepare the necessary disclosures for Colorway Inc. in relation to operating segments.
2 Prepare the reconciliations between segment information and amount shown in the
entity's financial statements.

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