The following income statement and balance sheet information is available for the operating segments of Bogart, Inc. Operating Segments (In millions of dollars) Revenue Cost of goods sold Gross margin Depreciation expense Administrative expense Operating profit before taxes Total assets Grant $2,076.0 (626.8) 1,449.2 (193.8) (174.3) $1,081.1 $3,000.0 Stewart Kelly $ 350.0 $ 304.0 (104.5) (174.1) 245.5 129.9 (45.9) (61.2) (93.5) (34.0) $ 106.1 $ 34.7 $ 430.0 $ 945.0 Flynn $ 195.0 (104.5) Cagney $1,375.0 90.5 (25.5) (12.8) Total $ 4,300.0 (731.2) 643.8 (183.6) (110.5) $ 52.2 $ 349.7 $ 1,623.8 $325.0 $2,300.0 $7,000.0 (1,741.1) 2,558.9 (510.0) (425.1) The segments do not sell goods or services to one another. The Flynn and Cagney segments have similar economic characteristics, products, processes, customers, distribution method, and regulatory environments. Required: 1. Explain why U.S. GAAP requires a company to disclose information about its business segments. 2. How does a firm define an operating segment under U.S. GAAP? 3. Identify Bogart's reportable segments. Aggregate segments where possible. Explain your logic for determining the reportable segments.
The following income statement and balance sheet information is available for the operating segments of Bogart, Inc. Operating Segments (In millions of dollars) Revenue Cost of goods sold Gross margin Depreciation expense Administrative expense Operating profit before taxes Total assets Grant $2,076.0 (626.8) 1,449.2 (193.8) (174.3) $1,081.1 $3,000.0 Stewart Kelly $ 350.0 $ 304.0 (104.5) (174.1) 245.5 129.9 (45.9) (61.2) (93.5) (34.0) $ 106.1 $ 34.7 $ 430.0 $ 945.0 Flynn $ 195.0 (104.5) Cagney $1,375.0 90.5 (25.5) (12.8) Total $ 4,300.0 (731.2) 643.8 (183.6) (110.5) $ 52.2 $ 349.7 $ 1,623.8 $325.0 $2,300.0 $7,000.0 (1,741.1) 2,558.9 (510.0) (425.1) The segments do not sell goods or services to one another. The Flynn and Cagney segments have similar economic characteristics, products, processes, customers, distribution method, and regulatory environments. Required: 1. Explain why U.S. GAAP requires a company to disclose information about its business segments. 2. How does a firm define an operating segment under U.S. GAAP? 3. Identify Bogart's reportable segments. Aggregate segments where possible. Explain your logic for determining the reportable segments.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
5.
Transcribed Image Text:The following income statement and balance sheet information is available for the operating
segments of Bogart, Inc.
Operating Segments
(In millions of dollars)
Revenue
Cost of goods sold
Gross margin
Depreciation expense
Administrative expense
Operating profit before taxes
Total assets
Grant
$2,076.0
(626.8)
1,449.2
(193.8)
(174.3)
$1,081.1
$3,000.0
Stewart Kelly
$ 350.0 $ 304.0
(104.5)
(174.1)
245.5
129.9
(45.9)
(61.2)
(93.5)
(34.0)
$ 106.1
$ 34.7
$ 430.0 $ 945.0
Flynn
$ 195.0
(104.5)
Cagney
$1,375.0
90.5
(25.5)
(12.8)
Total
$ 4,300.0
(731.2)
643.8
(183.6)
(110.5)
$ 52.2 $ 349.7 $ 1,623.8
$325.0
$2,300.0
$7,000.0
(1,741.1)
2,558.9
(510.0)
(425.1)
The segments do not sell goods or services to one another. The Flynn and Cagney segments
have similar economic characteristics, products, processes, customers, distribution method,
and regulatory environments.
Required:
1. Explain why U.S. GAAP requires a company to disclose information about its business segments.
2. How does a firm define an operating segment under U.S. GAAP?
3. Identify Bogart's reportable segments. Aggregate segments where possible. Explain your
logic for determining the reportable segments.
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