Reportable segments: It is the process of deciding which operating segment is separately reportable and separate supplemental disclosures must be made. It is based on management’s classifications of each operating segment for internal evaluation of the financial position and operating performance of the enterprise. The FASB specified three 10 percent significance rules to determine which of the operating segments shall have separately reported information. The separate disclosures are required for segments meeting at least one of the following tests: The segment revenue, including both external sales and intersegment sales, is 10 percent or more. The absolute value of segment’s profit or loss is 10 percent or more The segment’s assets are 10 percent or more of the total assets of all operating segments. The customer to be disclosed as major customer.

Question

Want to see the full answer?

Answer 1

Question

Chapter 13, Problem 13.8E

To determine

Reportable segments: It is the process of deciding which operating segment is separately reportable and separate supplemental disclosures must be made. It is based on management’s classifications of each operating segment for internal evaluation of the financial position and operating performance of the enterprise.

The FASB specified three 10 percent significance rules to determine which of the operating segments shall have separately reported information. The separate disclosures are required for segments meeting at least one of the following tests:

The segment revenue, including both external sales and intersegment sales, is 10 percent or more.

The absolute value of segment’s profit or loss is 10 percent or more

The segment’s assets are 10 percent or more of the total assets of all operating segments.

The customer to be disclosed as major customer.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

In the income statement for the current year, JK Company reported revenue P50,000,000, excluding intersegment sales P10,000,000, expenses P47,000,000 and net income P3,000,000. Expenses included payroll costs of P15,000,000. The combined identifiable assets of all operating segments at year-end totaled P40,000,000. What is the minimum amount of sales to be a major customer?

eon Jung Kook Corp. is preparing its year-end financial statements and has identified the following operating segments and their external revenues and intersegment revenues, respectively:· Begin- P4,800,000; P2,400,000· Euphoria- P1,600,000; P400,000· Decalcomania- P1,500,000; P0· My Time- P800,000; P0· Still with You- P600,000; P0· Paper Hearts- P400,000; P0Which of the following are reportable segments based on revenue test?

"Company B, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Company B had revenues of $90 Millions of USDs and earnings of $30 of Millions of USDs. Company B has filed a registration statement with the SEC for its IPO. If the industry average Price/Earnings ratio and Price/Revenues ratio for the recent fiscal year were 14 and 0.8 respectively. Estimate the IPO price for Company B using the Price/Earnings ratio and assuming that they will issue 15 Million shares."