Waterway Corporation is a diversified company that operates in five different in
ID: 2436448 • Letter: W
Question
Waterway 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 2018.
A
B
C
D
E
Sales revenue $40,600 $75,500 $571,400 $34,700 $56,000
Cost of goods sold 19,000 49,000 265,800 18,900 30,300
Operating expenses 9,900 39,800 231,800 12,300 17,900
Total expenses 28,900 88,800 497,600 31,200 48,200
Operating profit (loss) $11,700 $(13,300) $73,800 $3,500 $7,800
Identifiable assets $35,500 $80,300 $499,500 $65,800 $49,400
Sales of segments B and C included intersegment sales of $20,100 and $100,400, respectively.
(a) Determine which of the segments are reportable based on the:
Reportable Segment
(1) Revenue test.
(2) Operating profit (loss) test.
(3) Identifiable assets test.
(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
External Revenues
$
$
$
$
$
Intersegment Revenues
Total Revenues
$
Cost of Goods Sold
Operating Expenses
Total Expenses
Operating Profit (Loss)
$
$
$
$
$
Identifiable Assets
$
$
$
$
$
Explanation / Answer
Solution to part (a):
1. Revenue Test
10% * ($40,600 + $75,500 + $571,400 + $34,700 + $56,000) = $77,760. Only Segment C ($571,400) meets this test.
2. Operating profit (loss) test
10% * ($11,700 + $73,800 + $3,500 + $7,800) = $9,680. Segment A ($11,700); B ($13,300 absolute value); C ($73,800) all meet the test.
3. Identifiable Assets Test:
10% * ($35,500 + $80,300 + $499,500 + $65,800 + $49,400) = $73,050. Segment B ($80,300) and Segment C ($499,500) meets the test.
Solution to part (b):
A
B
C
Other
Totals
External Revenues
$40,600
$55,400
$471,000
$90,700
$657,700
Intersegment Revenues
-
$20,100
$100,400
-
$120,500
Total Revenues
$40,600
$75,500
$571,400
$90,700
$778,200
Cost of Goods Sold
$19,000
$49,000
$265,800
$49,200
$383,000
Operating Expenses
$9,900
$39,800
$231,800
$30,200
$311,700
Total Expenses
$28,900
$88,800
$497,600
$79,400
$694,700
Operating Profit (loss)
$11,700
$(13,300)
$73,800
$11,300
$83,500
Identifiable Assets
$35,500
$80,300
$499,500
$115,200
$730,500
A
B
C
Other
Totals
External Revenues
$40,600
$55,400
$471,000
$90,700
$657,700
Intersegment Revenues
-
$20,100
$100,400
-
$120,500
Total Revenues
$40,600
$75,500
$571,400
$90,700
$778,200
Cost of Goods Sold
$19,000
$49,000
$265,800
$49,200
$383,000
Operating Expenses
$9,900
$39,800
$231,800
$30,200
$311,700
Total Expenses
$28,900
$88,800
$497,600
$79,400
$694,700
Operating Profit (loss)
$11,700
$(13,300)
$73,800
$11,300
$83,500
Identifiable Assets
$35,500
$80,300
$499,500
$115,200
$730,500
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