Question

Sandhill 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 2021. A B C D E Sales revenue $39,900 $75,300 $573,800 $35,400 $55,100 Cost of goods sold 19,000 49,500 265,900 19,300 30,200 Operating expenses 10,100 40,500 233,700 11,900 18,300     Total expenses 29,100 90,000 499,600 31,200 48,500 Operating profit (loss) $10,800 $(14,700) $74,200 $4,200 $6,600 Identifiable assets $35,200 $79,900 $493,400 $66,300 $49,900 Sales of segments B and C included intersegment sales of $20,300 and $98,400, respectively.

Determine which of the segments are reportable based on the: Reportable Segment (1) Revenue test. ABCDEA and BA and CA and DA, B and CB and CB and EB, D and E (2) Operating profit (loss) test. ABCDEA and BA and CA and DA, B and CB and CB and EB, D and E (3) Identifiable assets test. ABCDEA and BA and CA and DA, B and CB and CB and EB, D and E

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).) A B C Other Totals External Revenues $ $ $ $ $ Intersegment Revenues Total Revenues $ Cost of Goods Sold Operating Expenses Total Expenses Operating Profit (Loss) $ $ $ $ $ Identifiable Assets $ $ $ $ $

Answer 1

Answer:

Any entity should report separately information about an operating segments thats meet any of the following quantitative thresholds:

a) Its reported revenue, including both sales to external customers and intersegment sales or transfers is 10% or more of combined revenue, internal and external, of all operating segments.

b) The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of

i) Combined reported profit of all operating segments that did not report a loss and

ii) the combined reported loss of all operating segments that reported a loss.

c) Its assets are 10% or more of the combined assets of all operating segments.

Operating segments that do not meet any of the quantitaitive thresholds may be considered as reportable and separately disclosed, if management believes that information about the segment would be useful to the users of the financial statements.

Segment	Sales Revenue	Profit	Assets
	External	Internal	Total sales
A	39,900.00	-	39,900.00	10,800.00	35,200.00
B	55,000.00	20,300.00	75,300.00	-14,700.00	79,900.00
C	4,75,400.00	98,400.00	5,73,800.00	74,200.00	4,93,400.00
D	35,400.00	-	35,400.00	4,200.00	66,300.00
E	55,100.00	-	55,100.00	6,600.00	49,900.00
Total	6,60,800.00	1,18,700.00	7,79,500.00	81,100.00	7,24,700.00

Quantitavive thresholds are calculated below
Segments	A	B	C	D	E
% segment sales to total sales	5.12%	9.66%	73.61%	4.54%	7.07%
% segment profit to total profit	13.32%	-18.13%	91.49%	5.18%	8.14%
% segment assets to total assets	4.86%	11.03%	68.08%	9.15%	6.89%

As per the above workings reportable segments are as follows

Segment C would separately reportable since they meet all three size criteria, though any one criteia is required.

Segment B does not satisfy revenue test, but does satisfy both profit and asset test, it would be separately reportable.

Segment A doest not satisfy revenue and asset test, but does satisfy profit test, it would be separately reportable.

Non-reportable segments

Segment D and E are non-reportable segments, since they have not satisfy any one criteria.

Note:An entity may combine information about operating segments that do not meet the quantitative thresholds with the information about other operating segments that do not meet the quantitative threshold to produce reportable segments only if operating segments have similer economic characteristics and share a majority of the aggregation criteria.