Question

In: Accounting

C2. Blanton Corporation is comprised of five operating segments. Information about each of these segments is...

C2. Blanton Corporation is comprised of five operating segments. Information about each of these segments is as follows (in thousands):

Linens

Kitchen

Grocery

Furniture

Stationery

Sales to outsiders

$

47

$

253

$

22

$

61

$

14

Intersegment transfers

2

13

7

15

12

Interest revenue - outsiders

1

-

2

4

-

Interest revenue - intersegment

-

3

-

-

11

Operating expenses - outsiders

58

207

20

51

13

Operating expenses - intersegment

1

10

3

8

11

Interest expense

-

6

-

1

-

Income taxes

(2

)

5

2

3

12

Tangible assets

9

58

9

6

4

Intangible assets

-

-

2

4

-

Intersegment loans

4

3

-

-

-

-

Required:

A) Which operating segments are reportable under the revenue test?

B) What is the total amount of revenues in applying the revenue test?

C) Which operating segments are reportable under the profit or loss test?

D) In applying the profit or loss test, what is the minimum amount an operating segment must have in order to meet the profit or loss test for a reportable segment?

E) Which operating segments are reportable under the asset test?

F) In applying the asset test, what is the minimum amount an operating segment must have in order to meet the asset test for a reportable segment?

G) Which operating segments are reportable?

H) According to the test results for reportable segments, is there a sufficient number of reported segments or should any additional segments also be disclosed? Explain the reason for your conclusion.

Solutions

Expert Solution

Part A

Segment

Revenues

percentage

Reportable / not reportable

Linens (47+2+1)

50

10.71%

Reportable

Kitchen (253+13+3)

269

57.60%

Reportable

Grocery (22+7+2)

31

6.64%

not reportable

Furniture (61+15+4)

80

17.13%

Reportable

Stationery (14+12+11)

37

7.92%

not reportable

Total

467

100.00%

Revenue = Sales to outsiders+Intersegment transfers+Interest revenue – outsiders+Interest revenue – intersegment

Percentage = segment revenue / total revenue

Part B

Segment

Revenues

Linens (47+2+1)

50

Kitchen (253+13+3)

269

Grocery (22+7+2)

31

Furniture (61+15+4)

80

Stationery (14+12+11)

37

Total

467

Part C

Segment

Revenues

Expenses

Profits

losses

Reportable / not reportable

Linens (47+2+1)

50

57

7

Reportable

Kitchen (253+13+3)

269

228

41

Reportable

Grocery (22+7+2)

31

25

6

not reportable

Furniture (61+15+4)

80

63

17

Reportable

Stationery (14+12+11)

37

36

1

not reportable

Total

467

409

65

7

Expenses = Operating expenses – outsiders+ Operating expenses – intersegment+ Interest expense+ Income taxes

Part D

minimum amount = 65*10% = 6.5

Part E

Segment

Revenues

percentage

Reportable / not reportable

Linens

13

13.13%

Reportable

Kitchen

61

61.62%

Reportable

Grocery

11

11.11%

Reportable

Furniture

10

10.10%

Reportable

Stationery

4

4.04%

Total

99

100.00%

Part F

minimum amount = 99*10% = $9.9

Part G

Linens

All three tests

Kitchen

All three tests

Grocery

Asset test

Furniture

All three tests

Part H

According to reportable tests, there are a sufficient number of reportable segments as 75% of total sales to outsiders, 75% of 397 (47+253+22+61+14) is $298, and the total sales to outsiders of four reportable segments is $383 (47+253+22+61). $383 is higher than the threshold for the 75% test


Related Solutions

Required information An analysis of Abbey Company's operating segments provides the following information: Operating Segment Revenues...
Required information An analysis of Abbey Company's operating segments provides the following information: Operating Segment Revenues Segment Profit (Loss) Segment Assets External Intersegment A $ 30 $ 27 $ 6 $ 40 B 45 0 32 120 C 36 0 (7 ) 82 D 200 116 4 190 E 44 0 (72 ) 38 Refer to the above information. Which of the operating segments above are reportable segments? Multiple Choice B, C, and D A, B, D, and E B,...
The following is financial information describing the six operating segments that make up Fairfield, Inc. (in...
The following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands): Segments Red Blue Green Pink Black White Sales to outside parties $ 1,811 $ 812 $ 514 $ 309 $ 121 $ 99 Intersegment revenues 16 91 109 0 16 302 Salary expense 614 379 402 312 317 62 Rent expense 139 166 81 92 42 31 Interest expense 65 59 82 49 14 5 Income tax expense (savings) 141 87 61 (86...
The following information pertains to Superstar Music's operating segments for the year ended December 31.   ...
The following information pertains to Superstar Music's operating segments for the year ended December 31.       Axl Bruce Celine Diddy Elvis Total External Sales 10,000 0 15,000 10,000 70,000 105,000 Intersegment Sales 5,000 15,000 0 10,000 30,000 60,000 Net Income (Loss) (9,000) 0 5,000 3,000 50,000 49,000 Assets 5,000 12,000 5,000 5,000 60,000 87,000    Based solely, on this information, indicate which of the segments are considered to be reportable segments:    Use check boxes to indicate correct answers....
Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands):
  Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands):   Segments   Red   Blue   Green   Pink   Black   White Sales to outside parties $ 1,831     $ 832     $ 534     $ 329     $ 141     $ 119   Intersegment revenues   36       111       129       0       36    ...
Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands):...
Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands): Segments Red Blue Green Pink Black White Sales to outside parties $ 1,822 $ 823 $ 525 $ 320 $ 132 $ 110 Intersegment revenues 27 102 120 0 27 313 Salary expense 625 390 413 323 328 73 Rent expense 150 177 92 103 53 42 Interest expense 76 70 93 60 25 16 Income tax expense (savings) 152 98 72 (97 )...
Given the information below about a portfolio comprised of 3 stocks, answer the following: (show all...
Given the information below about a portfolio comprised of 3 stocks, answer the following: (show all the details of your calculations): The expected return on each stock; The expected return on the portfolio using the individual securities’ expected returns obtained in question (a) above. Assume that the correlation between stock A and B is -0.25. Calculate the standard deviation of a portfolio containing 50% of stock A and 50% of stock B. Stock Initial investment value Expected end-of-period investment value...
Tuttle Company discloses supplementary operating segment information for its three reportable segments. Data for 20X3 are...
Tuttle Company discloses supplementary operating segment information for its three reportable segments. Data for 20X3 are available as follows: Segment A Segment B Segment C Sales $ 500,000 $ 300,000 $ 200,000 Traceable operating expenses 250,000 120,000 90,000 Additional 20X3 expenses include indirect operating expenses of $100,000. Appropriately selected common indirect operating expenses are allocated to segments based on the ratio of each segment's sales to total sales. The 20X3 operating profit for Segment A was: Multiple Choice $200,000 $180,000...
Information about Roboto, a product sold by Roberts, Inc. is as follows: Each unit requires five...
Information about Roboto, a product sold by Roberts, Inc. is as follows: Each unit requires five pounds of material X37. Roberts is planning raw materials needs for the second quarter. Inventory requirements are as follows:    a. The finished goods inventory on hand at the end of each month must be equal to 7,000 units plus 33% of the next month’s sales. The finished goods inventory on March 31 is budgeted based on this requirement. b. The raw materials inventory...
Please explain why $140,000. Elektronix, Inc. has three operating segments with the following information: DVDs VCRs...
Please explain why $140,000. Elektronix, Inc. has three operating segments with the following information: DVDs VCRs MP3s Sales to outsiders $ 4,000,000 $ 500,000 $ 2,000,000 Intersegment transfer none none $ 100,000 Segment expenses $ 3,000,000 $ 624,000 $ 1,700,000 Segment assets $ 14,000,000 $ 6,000,000 $ 5,000,000 What is the minimum amount of operating profit or loss an operating segment must have to be considered a reportable segment? A) $124,000. B) $127,600. C) $100,000. D) $130,000. E) $140,000.
CDM Corporation has two segments. The company sells boats and also rents boats. Information for the...
CDM Corporation has two segments. The company sells boats and also rents boats. Information for the two segments is given below. Currently, the total fixed costs are being split equally between the two divisions.   Boat Sales Boat Rentals Total Sales 206,000 300,000 506,000 Variable Costs 100,000 80,000 160,000 Operating Income -24,000 120,000 96,000 The manager of the boat rental division wants a bonus and suggests discontinuing the boat sales division because of its poor showing. After further analysis, it is...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT