Question

Ecru Company has identified five industry segments: plastics, metals, lumber, paper, and finance. It appropriately consolidated each of these segments in producing its annual financial statements. Information describing each segment in thousands) follows: Finance Metals $ 2,394 181 38 Lumber $ 731 146 25 Paper $ 442 158 B Sales to outside parties Intersegment transfers Interest income from outside parties Interest income from intersegment loans Operating expenses Interest expense Tangible assets Intangible assets Intersegment loans (debt) Plastics $6,895 159 B B 4,294 80 1,527 91 @ 46 209 35 106 199 1,892 35 3,236 411 1,186 70 564 674 24 811 67 714 Ecru does not allocate its $1.420,000 in common expenses to the various segments. Perform testing procedures to determine Ecru's reportable operating segments. 9. Revenue test: b. Profit or loss test: c. Asset test:

Answer 1

Finance $ Plastic 6,805 159 Paper 442 158 Given Data Particulars Sales to Outside Parties Intersegment Transfers Interest Income from Outside Parties Interest Income from Intersegment Loans Operating Expenses Interest Expense Tangible Assets Intangible Assets Intersegment Loans (Debt) A A A A A A A A Metals 2,394 $ 181 $ 38 $ $ 1,802 $ 35 $ 3,236 $ $ $ $ $ $ $ $ $ $ $ $ Lumber 731 $ 146 $ 25$ $ 1,106 $ 70 $ 564 $ $ $ 4,294 80 1,527 91 674 24 811 67 $ $ $ $ $ $ $ $ $ 46 209 35 106 199 411 $ 714 Finance Requirement A Revenue Test Working Note : Calculation of Revenue Particulars Sales to Outside Parties Intersegment Transfers Interest Income from Outside Parties Interest Income from Intersegment Loans Total Plastic 6,805 159 $ Paper 442 158 $ $ $ $ $ $ $ $ $ Metals 2,394 $ 181 $ 38 $ $ 2,613 $ Lumber 731 $ 146 $ 25 $ $ 902 $ A A A A Ꮎ Ꮎ Ꮎ Ꮎ 46 209 255 6,964 600 $ Segment Revenue Plastic Metals Lumber Paper Finance Total Ꮎ Ꮎ Ꮎ Ꮎ Ꮎ Ꮎ 6,964 2,613 902 600 255 11,334 Reported (or) Percent Not Reported 61.44% Reported 23.05% Reported 7.96% Not Reported 5.29% Not Reported 2.25% Not Reported 100.00%

Requirement B | Profit (or) Loss Test Segment Profit 2,590 776 Plastic Metals Lumber Paper Finance Total Revenue Expenses $ 6,964 $ 4,374 $ $ 2,613 $ 1,837 $ $ 902 $ 1,176 $ $ 600 $ $ 255 $ 141 $ $ 11,334 $ 8,226 $ 274 Loss Reported (or) Not Reported Reported Reported Not Reported 98 Not Reported Not Reported 372 $ $ $ $ $ $ 698 114 3,480 10% of the Highest of Profit (or) Loss is $ 3,480 * 10% = $ 348.00 Only Plastic and Metals have the more than 10%. So, only the two segments will be Reported. Working Note: Expenses Particulars Operating Expenses Interest Expense Total $ $ $ Plastic 4,294 $ 80 $ 4,374 $ Metals 1,802 $ 35 $ 1,837 $ Lumber 1,106 70 $ $ $ Paper 674 24 Finance $ 35 $ $ 141 106 1,176 698 Requirement C Asset Test Segment Assets Plastic Metals Lumber Paper Finance Total A A A A A A 1,618 3,647 564 878 913 7,620 Reported (or) Percent Not Reported 21.23% Reported 47.86% Reported 7.40% Not Reported 11.52% Reported 11.98% Reported 100.00% $

Lumber 564 Working Note : Total Assets Particulars Tangible Assets Intangible Assets Intersegment Loans (Debt) Total Plastic 1,527 $ 91 $ $ 1,618 $ $ $ $ $ Metals 3,236 $ 411 $ $ 3,647 $ Paper 811 67 $ $ $ $ Finance $ 199 $ $ 714 $ 913 564 878