West Corporation reported the following consolidated data for 20X2: Sales $ 834,
ID: 2401436 • Letter: W
Question
West Corporation reported the following consolidated data for 20X2:
Sales
$
834,000
Consolidated income before taxes
129,000
Total assets
1,210,000
Data reported for West’s four operating divisions are as follows:
Division A
Division B
Division C
Division D
Sales to outsiders
$
290,000
$
132,000
$
350,000
$
62,000
Intersegment sales
60,000
14,000
12,000
Traceable costs
246,000
91,000
291,000
83,000
Assets
401,000
106,000
501,000
76,000
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 $46,000 in 20X2. The company’s corporate center had $21,000 of general corporate expenses and $121,000 of assets that the chief operating decision maker did not use in making the decision regarding the operating segments.
Required:
Each of the following items is unrelated to the others.
a. The divisions are industry segments.
(1) Prepare a segmental disclosure worksheet for the company. (Do not round your intermediate calculations.)
(2) Prepare schedules showing which segments are reportable.
b. 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.
c. 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.
Sales
$
834,000
Consolidated income before taxes
129,000
Total assets
1,210,000
Explanation / Answer
a.
b.
c. As per ASC 280 if revenue from single customerr accounts for 10% or more of entry revenue, then the customer should be reported as major customer.
Company shouldd report revenue from each customer segment reporting the above revenue
Revenue threshold for major customer reporting
Hence Major Customer sales threshold is $83,400
Operating Segments A B C D Corporate Admin. Combined Intersegment Elimination Consolidated Revenues: Sales to unaffilated customers lated customers 2,90,000 1,32,000 3,50,000 62,000 8,34,000 8,34,000 Intersegment sales 60,000 14,000 12,000 86,000 86,000 Total Revenue 3,50,000 1,32,000 3,64,000 74,000 9,20,000 -86,000 8,34,000 Operating Costs: Traceable costs -2,46,000 -91,000 -2,91,000 -83,000 -7,11,000 86,000 -6,25,000 Allocated [WN1] -17,500 -6,600 -18,200 -3,700 -46,000 -46,000 Segment profit/(loss) 86,500 34,400 54,800 -12,700 1,63,000 1,63,000 Other items: General Corporate expenses -21,000 -21,000 -21,000 Income from continuing operations 86,500 34,400 54,800 -12,700 -21,000 1,42,000 1,42,000 Assets: Segment 4,01,000 1,06,000 5,01,000 76,000 10,84,000 10,84,000 General Corporate 1,21,000 1,21,000 1,21,000 Total Assets 4,01,000 1,06,000 5,01,000 76,000 1,21,000 12,05,000 12,05,000Related Questions
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