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Exercise 24-3 Sweet Company is involved in four separate industries. The following information is available for...

Exercise 24-3 Sweet Company is involved in four separate industries. The following information is available for each of the four industries.

Operating Segment Total Revenue Operating Profit (Loss) Identifiable Assets

W $57,014 $15,710 $160,428

X 9,820 2,450 80,214

Y 24,575 (3,090) 19,362

Z 6,891 1,130 16,596

$98,300 $16,200 $276,600

Determine which of the operating segments are reportable based on the:

Reportable Segments

(a) Revenue test. __________________

(b) Operating profit (loss) test. ________________

(c) Identifiable assets test. _________________

Expert Solution

Reportable segment based on Revenue Test.

Operating Segment	Revenue	%
W	$57,014	58.00%
X	$9,820	9.99%
Y	$24,575	25.00%
Z	$6,891	7.01%
	$98,300	100.00%

Reportable if revenue is 10% or more of the combined revenue

Hence, Segment W and Z are reportable

Reportable segment based on Operating profit (loss) test.

Operating Segment	Profit	Loss
W	$15,710	$0
X	$2,450	$0
Y	$0	$3,090
Z	$1,130	$0
	$19,290	$3,090

Greater of Absolute amount of combined profit or loss is $19,290.

Segment is reportable if absolute amount of its reported profit or loss is 10% or more of the above amount i.e. $1,929.

Hence Segment W,X & Y are reportable

Reportable segment based on Identifiable assets Test.

Operating Segment	Identifiable Assets	%
W	$1,60,428	58.00%
X	$80,214	29.00%
Y	$19,362	7.00%
Z	$16,596	6.00%
	$2,76,600	100.00%

Reportable if revenue is 10% or more of the combined identifiable assets.

Hence, Segment W and X are reportable

ekkarill92 answered 11 months ago

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