Exercise 24-3 Culver Company is involved in four separate industries. The follow
ID: 2510047 • Letter: E
Question
Exercise 24-3
Culver Company is involved in four separate industries. The following information is available for each of the four industries.
Operating Segment
Total Revenue
Operating Profit (Loss)
Identifiable Assets
Determine which of the operating segments are reportable based on the:
Reportable Segments
Operating Segment
Total Revenue
Operating Profit (Loss)
Identifiable Assets
W $59,160 $16,780 $155,846 X 10,190 2,550 77,923 Y 25,500 (3,240) 18,809 Z 7,150 1,210 16,122 $102,000 $17,300 $268,700Explanation / Answer
Solution :
(a) Revenue Test : recognise a segment if greater or equal to 10% of all the total operating revenue.
The total revenue is 102,000 . Hence 10% would be 10,200. All segments with revenue more than or equal to 10,200 need to be reported. Hence, Segment W and Y should be reportable.
(c)Identifiable assets tests : recognise a segment if greater or equal to 10% of all the total identifiable assets .
The total assets are 268,700 . Hence 10% would be 26,870. All segments with assets more than or equal to 26,870 need to be reported. Hence, Segment W and X should be reportable.
(b) Operating Profit (loss) test : Recognise a segment if more than equal to the greater of the absolute sum of (1) all profitable segments (2) all loss -reporting segments.
Absolute sum of all profitable segments = 16,780 + 2550+ 1210 = 20,540
Absoute sum of all loss making segments = 3240.
Hence, greater of the above is 20,540. All segments having 2,054 ( 10 % of 20,540 )
Therefore , W,X,Y would be reportable.
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