Question

1. Segment Reporting Arlo Corporation operates in five different industry sectors. Information for to cach of these industry sectors is as follows: Industry Total Identifiable Operating Segment Revenue Assets Profit (Loss) East $62.000 $ 26,000 $ 29,000 North 56.000 9,000 4.000 South 17.000 42.000 ( 28.000) Central 41,000 10,000 (13,000) West 11,000 14.000 2,000 List whether each of the following tests is either Passed or Failed for each of the five industry sectors listed above: Revenue Test. Identifiable Assets Test, Operating Profit (Loss) Test.

Answer 1

As per segment reporting, a segment becomes reportable if it has atleats 10% revenue, 10% profits/losses or 10% of combined assets of the entity

A B C D E F G H 1 Test] 2 Segment Rvenue % Assets % Profit(loss) % 3 East 62000 33% 26000 26% 29000 71% 4 North 56000 30% 9000 9% 4000 10% 5 South 17000 9% 42000 42% -28000 -68% 6 Central 41000 22% 10000 9.90% - 13000 -32% 7 West 11000 6% 14000 14% 2000 5% 8 Total 187000 100% 101000 100% 41000 100% 9 10 Since losses (41000) are more than profit(35000) base for % will be taken as 41000 11 12 From the above we can see reportable segments are= East, North, South, central and west 13 Because they all fulfil atleast one condition 14 15 Income before Annual 16 Quarter tax tax rate Tax 17 1 820000 26% 118205.3 18 2 300000 20% 118205.3 19 3 400000 24% 118205.3 20 total 1520000 21 Average tax rate (26+20+24)/3 22 Tax expense= 1520000*23.33% 23.33% 354616 22