Question

Multiplex Inc., a public company whose stock is traded on a national stock exchange, reported the following information on its consolidated financial statements for 20X5 From the consolidated income statement: Sales revenues Rental revenues Income before income taxes Income taxes $657,000,000 53,000,000 89,000,000 24,000,000 From the consolidated balance sheet: Total assets $672,000,000 Multiplex management determined that it had the following operating segments during 20X5: (1) car rental, (2) aerospace, (3) communications, (4) health and fitness products, and (5) heavy equipment manufacturing. The company assembled the following information for these industry segments for 20X5 (dollar amounts stated in millions) Health Fitness $ 50 Heavy $290 45 Communications $ 65 Equipment Item Sales Rentals Intersegment sales Cost of goods sold Selling expenses Other traceable expenses Allocation of common costs Assets Other information: Aerospace $251 Rental $ 54 13 138 82 12 181 20 240 20 21 15 60 147 110 120 Depreciation expense (included above) 65 80 Capital expenditures 70

Answer 1

Answer a.
Multiplex Inc.
Schedule for 10% Revenue Test
For the Year Ended Dec 31, 20X5
(In Millions)
Segment	Segment Revenue	Percent of Combined Revenue	Reportable Segment
Car Rental	67	8.72%	No
Aerospace	251	32.68%	Yes
Communications	65	8.46%	No
Health/Fitness	50	6.51%	No
Heavy Equipment	335	43.62%	Yes
Total	768
Multiplex Inc.
Schedule for 10% Segment Profit or Loss Test
For the Year Ended Dec 31, 20X5
(In Millions)
Segment	Segment Profit (Loss)	Percent of Test Amount	Reportable Segment
Car Rental	33	24.09%	Yes
Aerospace	8	5.84%	No
Communications	36	26.28%	Yes
Health/Fitness	14	10.22%	Yes
Heavy Equipment	46	33.58%	Yes
Total	137
Calculation of Operating Profit:
	Car Rental	Aerospace	Communications	Health/Fitness	Heavy Equipment
Revenue	67	251	65	50	335
Cost of Goods Sold		(138)			(181)
Selling Expenses	(20)	(82)	(8)	(21)	(77)
Other Traceable Expenses	(8)	(12)	(15)	(9)	(20)
Allocation of Common Costs	(6)	(11)	(6)	(6)	(11)
Operating Profit	33	8	36	14	46
Multiplex Inc.
Schedule for Segment Assets Test
For the Year Ended Dec 31, 20X5
(In Millions)
Segment	Segment Assets	Percent of Test Amount	Reportable Segment
Car Rental	60	8.86%	No
Aerospace	147	21.71%	Yes
Communications	110	16.25%	Yes
Health/Fitness	120	17.73%	Yes
Heavy Equipment	240	35.45%	Yes
Total	677
Answer b.
Yes
Answer c.
Multiplex Operations
Industry Segments
(In Millions)
	Car Rental	Aerospace	Communications	Health/Fitness	Heavy Equipment	Combined
Sales to: Unaffiliated Customers	54	251	65	50	290	710
Intersegment Sales	13				45	58
Total Revenue	67	251	65	50	335	768
Depreciation	8	55	8	9	65	145
Segment Profit	33	8	36	14	46	137
Segment Assets	60	147	110	120	240	677
Expenditure for Segment Assets	7	70		55	80	212