In: Accounting
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. _________________
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