Question

Problem 24-2 Oriole Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2018. A В C D Е $578,100 $40,300 $73,800 $35,600 $55,000 Sales revenue Cost of goods sold 19,100 270,800 50,100 19,200 29,500 Operating expenses 39,800 234,600 18,000 9,800 12,000 Total expenses 89,900 31,200 28,900 505,400 47,500 $4,400 $7,500 $11,400 $(16,100) $72,700 Operating profit (loss) $34,600 $79,100 $506,900 $63,800 $50,000 Identifiable assets Sales of segments B and C included intersegment sales of $20,100 and $99,800, respectively. (a) Determine which of the segments are reportable based on the: Reportable Segment (1) Revenue test. (2) Operating profit (loss) test. (3) Identifiable assets test (b) Prepare the necessary disclosures required by GAAP. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Totals Other A В C External Revenues $ Intersegment Revenues Total Revenues Cost of Goods Sold Operating Expenses Total Expenses Operating Profit (Loss) Identifiable Assets

Answer 1

Under GAAP, a segment is to be reported if it accounts for - 10% of Total Revenues - 10% of Total Profits - 10% of Total Assets Also, minimum 75% of total revenues need to be reported PARTICULARS A В с E TОTAL Revenues 73,800 78,100 2,82,800 40,300 35,600 55,000 % of Total Revenues 14.25% 26.10% 27.62% 12.59% 100% 19.45% Profits -16,100 7,500 11,400 72,700 4,000 95,600 % of Total Profits 12% 17% 76% 4% 0% 8% 79,100 Assets 34,600 5,06,900 63,800 50,000 7,34,400 % of Total Assets 5% 11% 69% 9% 7% 100% REPORTABLE SEGMENTS ARE AS FOLLOWS: Based on Revenue:- A, B,C, D, E. (All segments as each has more than 10% of total revenues) A, B,C. (All these segments have more than 10% of total profits/losses) B,C. (All these segments have more than 10 % of total assets) Based on Profits:- Based on Assets: NOTE:- Losses in segment B and profits in other segemnt. Larger absolute figure is taken for % calculation. Profits have larger absolute figure and hence profit is taken. DISCLOSURES UNDER GAAP : PARTICULARS A В C OTHER TОTAL External Revenues 40,300 53,700 4,78,300 90,600 6,62,900 Intersegment 99,800 1,19,900 20,100 Revenues TOTAL REVENUES 40,300 73,800 5,78,100 90,600 7,82,800 3,88,700 3,14, 200 Cost of Goods Sold 2,70,800 19,100 50,100 48,700 Operating Expenses 39,800 9,800 2,34,600 30,000 89,900 78,700 TOTAL EXPENSES 28,900 5,05,400 7,02,900 Operating Profit/Loss 11,400 72,700 11,900 -16,100 79,900 Identifiable Assets 5,06,900 1,13,800 7,34,400 34,600 79,100