Question

P13-19 Segment Disclosures in the Financial Statements LO 13-2 Multiplex Inc., a public consolidated financial statements for 20X5: company whose stock is traded on a national stock exchange, reported the following information on its Prom the consolidated income statement Sales revenues Rental revenues Incone before income taxes $657,000,000 53,000,000 89,000,000 24,000,000 Fron the consolidated balance sheet: Total assets $672,000,000 Multiplex management determined that it had the following 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 illions): lealth/Beavy erospace 251 ations ritsess Sales s 65 50 $290 $ 54 Interseqment sales Cost of goods sold Selling expenses Other traceable expenses Allocation of common costs 138 82 12 181 20 240 20 15 60 147 110 120 other information Depreciation expense (ineluded above) 65 80 Capital expenditures 70 Additional Information 1. The corporate headquarters had general corporate expenses totaling $37,000,000 and assets of $29,000,000 (the chief operating 2. The car rental segment's $13,000,000 of intersegment sales consisted of rentals to the aerospace ($6,000,000) and decision maker used neither piece of information in defining operating segment performance) communications ($7,000,000) segments. The intersegment sales of $45,000,000 of the heavy equipment segment were made to the aerospace segment to use in its manufacturing operations. The heavy equipment segment realized a profit of $12,000,000 from this sale. At December 31, 20X5, $11,000,000 of this profit was unrealzed from a consolidated viewpoint. 3. At December 31, 20x5, no intercompany receivables or payables were related to the intersegment car rentals. However, the heavy equipment segment had a $23,000,000 receivable from the intersegment sale to the aerospace segment. The company's policy is to include intersegment receivables in a segment's assets for purposes of evaluating segment performance. e NTERCOMPANY AND SEGMENTS Required: a. Prepare schedules for each of the three 10 percent tests:( the revenue test, (2) the proft-or-loss test, schedule should indicate which of Multiplex's industry segments are reportable segments for 20 Round your percentage answers to 1 decimal place.) and (3) the assets test. Each ints Schedule for 10% Revenue Test For the Year Ended December 31,20x5 fin millions) Percent of Segment Reportable Segment Car Rental Health Fitness Heavy Equipment Total MULTIPLEX INC. Schedule for the 10% Segment Profit or Loss Test For the Year Ended December 31, 20X5 (in millions) SegmentPercent of Profit (loss) Test Amount Reportable Segment Car Rental Communications Health Fitness Heavy Equipment Total Total ook b. Do Multiplex's reportable segments meet the 75 percent revenue test? Yes No c. Prepare the information about the company's operations in different industry segments as required t answers in millions.) by ASC 280. (Enter your MULTIPLEX OPERATIONS Industry Segments (in Smillions) Item Car Rental Aerospace Communications HealthHeavy Combined Sales to: unaffiliated customers Intersegment sales Total revenue Depreciation Segment profit Segment assets Expenditures for segment assets K Prev 9 of 9 i Next>

Answer 1

A)
Multiplex Inc.
Schedule for 10% Revenue Test
For the Year Ended December 31, 20X5
(In millions)
Segment	Segment Revenue	Percent of Combined Revenue of $768 Million	Reportable Segment
Car Rental	$       67.00	9%	No
Aerospace	$     251.00	33%	Yes
Communications	$       65.00	8%	No
Health/Fitnes	$       50.00	7%	No
Heavy Equipment	$     335.00	44%	Yes
Total	$     768.00	100%
b)
Multiplex Inc.
Schedule for the 10% Segment Profit or Loss Test
For the Year Ended December 31, 20X5
(In millions)
Segment	Segment profit/(loss)	Percent of Combined test of $768 Million	Reportable Segment
Car Rental	$       33.00	24%	Yes
Aerospace	$         8.00	6%	No
Communications	$       36.00	26%	Yes
Health/Fitnes	$       14.00	10%	No
Heavy Equipment	$       46.00	34%	Yes
Total	$     137.00	100%
c)
Multiplex Inc.
Schedule for Segment 10% Assets Test
For the Year Ended December 31, 20X5
(In millions)
Segment	Segment Asset	Percent of Combined test of $677 Million	Reportable Segment
Car Rental	$       60.00	8.86%	No
Aerospace	$     147.00	21.71%	Yes
Communications	$     110.00	16.25%	Yes
Health/Fitnes	$     120.00	17.73%	Yes
Heavy Equipment	$     240.00	35.45%	Yes
Total	$     677.00	100.00%
d)
Multiplex Inc.
Schedule of Reportable Segments
For the Year Ended December 31, 20X5
Segment	Revenue Test	Profit/(loss) test	Asset Test	Segment Test
Car Rental	No	Yes	No	Yes
Aerospace	Yes	No	Yes	Yes
Communications	No	Yes	Yes	Yes
Health/Fitnes	No	No	Yes	Yes
Heavy Equipment	Yes	Yes	Yes	Yes
B)
Yes, the 75% revenue test is satisfied because all of Multiplex's operating segments are reportable.
C)
Multiplex Operations
Industry Segments
(in $millions)
Items	Car Rental	Aerospace	Communications	Health/Fitnes	Heavy Equipment	Combined
Sales to:
unaffiliated customers	$       54.00	$                 251.00	$                65.00	$             50.00	$     290.00	$     710.00
Intersegment sales	$       13.00				$       45.00	$       58.00
Total Revenue	$       67.00	$                 251.00	$                65.00	$             50.00	$     335.00	$     768.00
Depreciation	$         8.00	$                   55.00	$                  8.00	$               9.00	$       65.00	$     145.00
Segment Profit	$       33.00	$                     8.00	$                36.00	$             14.00	$       46.00	$     137.00
Segment assets	$       60.00	$                 147.00	$              110.00	$           120.00	$     240.00	$     677.00
Expenditures for segment assets	$         7.00	$                   70.00		$             55.00	$       80.00	$     212.00

3 Multiplex Inc 4 Schedule for 10% Revenue Test 5 For the Year Ended December 31, 20X5 6 (In millions) 7 Segment 8 Car Rental 9 Aerospace 10 Communications 11 Health/Fitnes 2 Heavy Equipment 13 Total 14 15 b) 16 Multiplex Inc. 17 Schedule for the 1096 Segment Profit or Loss Test 18 For the Year Ended December 31, 20OX5 19 (In millions) Percent of Combined Revenue of $768 Million -B8/SB$13 B9/SB$13 -B10/SB$13 -B11/SB$13 -B12/SB$13 -B13/SB$13 Segment Revenue -54+13 251 65 50 -290+45 SUM(B8:B12) Reportable Segment No Yes No No Yes Percent of Combined test of $768 20 Segment 21 Car Rental 22 Aerospace 23 Communications 24 Health/Fitnes 25 Heavy Equipment 26 Total 27 Segment profit/(loss) Million -(54+13)-(20+8+6 B21/5B$26 -251-(138+82+ -B22/5B$26 -65-(8+15+6) -50-(21+9+6) -(290+45)-(181+77+20+11-B25/SB$26 SUM(B21:B25) Reportable Segment Yes No Yes No Yes B23/SB$26 -B24/$B$26 B26/$B$26 29 Multiplex Inc 30 Schedule for Segment 10% Assets Test 31 For the Year Ended December 31, 20x5 32 (In millions) 33 Segment 34 Car Rental 35 Aerospace 36 Communications 37 Health/Fitnes 38 Heavy Equipment Segment Asset 60 147 110 120 240 Percent of Com bined test of $677 Million -B34/SB$39 -B35/SB$39 «В 36/SB$39 -B37/SB$39 -838/$8 $39 Reportable Segment No Yes Yes Yes Yes