Problem 24-2 Cineplex Corporation is a diversified company that operates in five

Question

Problem 24-2

Cineplex 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 2015.

A

B

C

D

E

Sales of segments B and C included intersegment sales of $20,500 and $101,370, respectively.

(a) Determine which of the segments are reportable based on the:

Reportable Segment

(b) 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

A

B

C

D

E

Sales revenue $45,800 $74,600 $589,600 $36,400 $53,600 Cost of goods sold 19,200 50,500 280,200 19,200 33,000 Operating expenses 9,477 45,800 242,300 12,290 19,040     Total expenses 28,677 96,300 522,500 31,490 52,040 Operating profit (loss) $17,123 $(21,700) $67,100 $4,910 $1,560 Identifiable assets $42,200 $88,600 $504,400 $74,300 $50,500

Explanation / Answer

a) 1. As per the revenue test.segments which contribute atleast 10% of the total revenue are to be reported seperately Based on the above , only Segment C qualify hence based on the above only segment C is to be reported 2, As per operating profit or loss test, a segment should be separately reported if the numerical value of its profit or loss is at least 10% of the greater of the combined profit for all profitable segments or the combined loss of all unprofitable segments. Total operating profit = 17123 + 67100 + 4910 + 1560            = 90693 Total operating loss = 21700 Hence any segments which has operating profit of atleast 9069 ( ie 10% of 90693) are to be reported Hence segment A and C are to be reported 3) a segment should be separated if it comprises at least 10% of the company’s total assets. company’s total assets = 760000 hence all segments which have total assets of atleaset 76000 are to be reported seperately Based on the above segment B & C are to be reportrd b) A B C Others Total External Revenues 45800 54100 488230 90000 678130 Intersegment Revenues 20500 101370 0 121870 Total Revenues 45800 74600 589600 90000 800000 Cost of Goods Sold 19200 50500 280200 52200 402100 Operating Expenses 9477 45800 242300 31330 328907 Total Expenses 28677 96300 522500 83530 731007 Operating Profit (Loss) 17123 -21700 67100 6470 68993 Identifiable Assets 42200 88600 504400 124800 760000

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