Statement 1: A research and development function could qualify as an operating segment Statement 2: When applying the 75% revenue sufficiency test, the next largest operating segment shall always be selected. Statement 3: Segment data may be aggregated if majority of the aggregation criteria are met. Statement 4: Entity-wide disclosures are required by publicly held companies with more than one reportable segment.

Statement 1: A research and development function could qualify as an operating segment Statement 2: When applying the 75% revenue sufficiency test, the next largest operating segment shall always be selected. Statement 3: Segment data may be aggregated if majority of the aggregation criteria are met. Statement 4: Entity-wide disclosures are required by publicly held companies with more than one reportable segment.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 15PC

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Topic: Operating Segments Requirements: (Show Solutions) a. Identify the reportable segments under the quantitative thresholds of PFRS 8. b. Determine whether the reportable segments meet the limit on external revenues under PFRS 8. c. Determine the minimum amount of revenue that warrants disclosure of a major customer.
Which of the following does U.S. GAAP not consider to be an objective of segment reporting? a.It helps users better understand the enterprise’s performance. b. It helps users better assess the enterprise’s prospects for future cash flows. c. It helps users make more informed judgments about the enterprise as a whole. d. It helps users make comparisons between a segment of one enterprise and a similar segment of another enterprise 21. Livro Company has three operating segments with the following information: Books Calendars Bags Sales to outsiders $12,000 $9,000 $8,000 Intersegment transfers 1,000 500 1,500 In addition, corporate headquarters generates revenues of $2,000. What is the minimum amount of revenue that each of these segments must generate to be considered separately reportable? a.$2,900 b.$3,200 c.$3,300 d. $3,400
Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands):Consider the following questions independently. None of the six segments has a primarily financial nature.a. What minimum revenue amount must any one segment generate to be of significant size to require disaggregated disclosure?b. If only Red, Blue, and Green necessitate separate disclosure, is Fairfield disclosing disaggregated data for enough segments?c. What volume of revenues must a single customer generate to necessitate disclosing the existence of a major customer?d. If each of these six segments has a profit or loss (in thousands) as follows, which warrants separate disclosure?
Which of the following statements is TRUE concerning the 75% overall size test for operating segments? * A. The total external revenue of all reportable segments is 75% or more of the entity's total external revenue. B. The total intersegment revenue of all reportable segments is 75% or more of the entity's total revenue, both external and intersegment. C. The total external revenue of all reportable segments is 75% or more of the entity's total revenue, both external and intersegment. D. The total external revenue and intersegment revenue of all reportable segments is 75% or more of the entity's total revenue, both external and intersegment.
Choose the correct. Which of the following is not necessarily true for an operating segment?a. An operating segment earns revenues and incurs expenses.b. The chief operating decision maker regularly reviews an operating segment to assess performance and make resource allocation decisions.c. Discrete financial information generated by the internal accounting system is available for an operating segment.d. An operating segment regularly generates a profit from its normal ongoing operations.
Listed below are nine terms and definitions associated with the FASB’s conceptual framework. Terms Definitions 1. Completeness a. Requires the consideration of the costs and value of information. 2. Comparability b. Ability to make comparisons between firms. 3. Neutrality c. Comprehending the meaning of accounting information. 4. Understandability d. Including all information necessary to report the business activity. 5. Cost effectiveness e. The business will last indefinitely unless there is evidence otherwise. 6. Verifiability f. Recording transactions only for the company. 7. Decision g. Implies consensus among different measures. 8. Economic entity assumption h. Accounting should be useful in making decisions. 9. Going concern assumption i. Accounting information should not favor a particular group. Required:Pair each term with its related definition.
Segment Reporting To provide information that can be used to evaluate _____ and ______ across different lines of business and in different parts of the world, Multinational Corporations (MNCs) disaggregate consolidated totals and provide disclosures on a segment basis. This information may also be used to assess how __________ an MNC is. Fill in the spaces?
You are the financial controller of Black Stone PLC, a listed company which prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Your managing director, who is not having a background in accounting, has requested you to clarify his questions (given below in points i & ii) concerning segment reporting, with relevant examples:i. In which circumstance the company can able to declare a segment as reportable segment even if they do not meet the quantitative thresholds? Explain the disclosure requirement on reportable operating segments.
Carinal Ltd. specializes in the development of electronic components within quite a competitive environment causing concerns for marketing and pricing. Its non-current assets primarily include IT software, property, and investments, and there have been additions to these during the year. As audit manager, you are conducting a preliminary analytical review and associated risk analysis for this client for the year ended June 30 2022. You have been presented with the following draft financial information about Carinal with incomplete ratios and percentages calculation. INCOME STATEMENT Year ended June 30 2022 2021 $'000 $'000 Revenue 22,450 18,675 Cost of Sales 8,475 8,055 Gross Profit 13,975 10,620 Distribution costs 4,245 3,120 Administrative expenses 1,276 2,134 Selling expenses 5,555 512 Profit from operations 2,899 4,854 Net interest receivable 1,245 495 Profit before tax 4,144 5,349 Income tax expenses 2,145 2,345 Net profit 1,999 3,004 Retained…
Carinal Ltd. specializes in the development of electronic components within quite a competitive environment causing concerns for marketing and pricing. Its non-current assets primarily include IT software, property, and investments, and there have been additions to these during the year. As audit manager, you are conducting a preliminary analytical review and associated risk analysis for this client for the year ended June 30 2022. You have been presented with the following draft financial information about Carinal with incomplete ratios and percentages calculation. INCOME STATEMENT Year ended June 30 2022 2021 $'000 $'000Revenue 22450 18675Cost of sales 8475 8055Gross Profit 13975 10620Distribution costs 4245 3120Administrative expenses 1276 2134Selling expenses 5555 512Profit from operations 2899 4854Net interest receivable 1245 495Profit before tax 4144 5349Income tax expense 2145 2345Net profit 1999 3004Retained profits 1325 2105Dividends paid $1250 $1049Accounting ratios and…
Carinal Ltd. specializes in the development of electronic components within quite a competitive environment causing concerns for marketing and pricing. Its non-current assets primarily include IT software, property, and investments, and there have been additions to these during the year. As audit manager, you are conducting a preliminary analytical review and associated risk analysis for this client for the year ended June 30 2022. You have been presented with the following draft financial information about Carinal with incomplete ratios and percentages calculation. INCOME STATEMENT Year ended June 30 2022 2021 $'000 $'000 Revenue 22,450 18,675 Cost of Sales 8,475 8,055 Gross Profit 13,975 10,620 Distribution costs 4,245 3,120 Administrative expenses 1,276 2,134 Selling expenses 5,555 512 Profit from operations 2,899 4,854 Net interest receivable 1,245 495 Profit before tax 4,144 5,349 Income tax expenses 2,145 2,345 Net profit 1,999 3,004 Retained…
Which of the following is not necessarily true for an operating segment?a. An operating segment earns revenues and incurs expenses.b. The chief operating decision maker regularly reviews an operating segment to assess performance and make resource allocation decisions.c. Discrete financial information generated by the internal accounting system is available for an operating segment.d. An operating segment regularly generates a profit from its normal ongoing operations.