Data reported for West’s four operating divisions are as follows: Intersegment s

Question

Data reported for West’s four operating divisions are as follows:

Intersegment sales are priced at cost, and all goods have been subsequently sold to nonaffiliates. Some joint production costs are allocated to the divisions based on total sales. These joint costs were $45,000 in 20X2. The company’s corporate center had $30,000 of general corporate expenses and $130,000 of assets that the chief operating decision maker did not use in making the decision regarding the operating segments.

Each of the following items is unrelated to the others.

The divisions are industry segments.

Prepare a segmental disclosure worksheet for the company. (Do not round your intermediate calculations.)

Prepare schedules showing which segments are reportable

Assume that each division operates in an individual geographic area, Division A is in the domestic area, and each of the other divisions operates in a separate foreign country. Assume that one-half of the assets in each geographic area represents long-lived, productive assets as defined in ASC 280. Prepare schedules showing which geographic areas are reportable using a 10 percent materiality threshold.

Determine the amount of sales to an outside customer that would cause that customer to be classified as a major customer under the criteria of ASC 280.

Explanation / Answer

Requirement a-1: Operating Segments Corporate Combined Intersegment Elimination Consolidated A B C D Revenues:         Sales to unaffiliated customers $270,000 $150,000 $330,000 $51,000 $801,000 $801,000         Intersegment sales $62,000 $16,000 $21,000 $99,000 ($99,000)                  Total Revenue $332,000 $150,000 $346,000 $72,000 $900,000 ($99,000) $801,000 Operating Costs:          Traceable costs ($255,000) ($100,000) ($300,000) ($92,000) ($747,000) $99,000 ($648,000)          Allocated cost ($16,600) ($7,500) ($17,300) ($3,600) ($45,000) ($45,000)                   Segment profit/(loss) $60,400 $42,500 $28,700 ($23,600) $108,000 $108,000 Other items:         General Corporate expenses ($30,000) ($30,000) ($30,000) Income from continuing operations $60,400 $42,500 $28,700 ($23,600) ($30,000) $78,000 $78,000 Assets:               Segment $491,000 $115,000 $510,000 $85,000 $1,201,000 $1,201,000               General Corporate $130,000 $130,000 $130,000 Total Assets $491,000 $115,000 $510,000 $85,000 $130,000 $1,331,000 $1,331,000 Notes: Segment revenue $332,000 $150,000 $346,000 $72,000 Segment revenues as % of total revenue (a) 37% 17% 38% 8% Joint cost (b) $45,000 $45,000 $45,000 $45,000 Allocated cost (b) × (a) $16,600 $7,500 $17,300 $3,600 Requirement a-2: Particulars Revenues Segment Profit Segment Assets Segment A Yes Yes Yes Segment B Yes Yes No Segment C Yes Yes Yes Segment D No No No Note Reportable when >= 10% $90,000 $10,800 $120,100 Requirement b: Particulars Revenues Long-lived Assets Segment A - Domestic Yes $245,500 Yes Segment B - Foreign Yes $57,500 No Segment C - Foreign Yes $255,000 Yes Segment D - Foreign No $42,500 No Note Reportable when >= 10% $90,000 $60,050 Requirement c: Total revenues $801,000 Reportable percentage 10% The amount of sales $80,100

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