ADVANCED ACCOUNTING
12th Edition
ISBN: 9780357671221
Author: FISCHER
Publisher: CENGAGE L
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Chapter 12, Problem 9.1E
To determine
Introduction: Reporting of operating segment of a company in the disclosures accompanying in its financial statements. A segment should be reported if it is at least 10% of the total revenue, or 10% of combined assets, or 10% of profit & loss account. Also, the total segment reported should constitute 75% of the total revenues.
To Select: The segments to be reported.
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What are the reportable segments? (Answer should be presented in this manner, example: A-B-C-D-E-F-G)
Solomon Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division.
BOWMAN DIVISION
Income Statement
For the Year Ended December 31, Year 2
Sales revenue
$
107,280
Cost of goods sold
58,875
Gross margin
48,405
Operating expenses
Selling expenses
(2,680
)
Depreciation expense
(4,135
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Operating income
41,590
Nonoperating item
Loss on sale of land
(4,000
)
Net income
$
37,590
BOWMAN DIVISION
Balance Sheet
As of December 31, Year 2
Assets
Cash
$
12,532
Accounts receivable
40,316
Merchandise inventory
36,900
Equipment less accumulated depreciation
90,288
Nonoperating assets
9,600
Total assets
$
189,636
Liabilities
Accounts payable
$
9,447
Notes payable
67,000
Stockholders’ equity
Common stock
70,000
Retained earnings
43,189
Total liabilities and stockholder's…
A corporation is considering the acquisition of one of its parts suppliers and has been reviewing the pertinent financial statements. Specific data, shown below, has been selected from these statements for review and comparison with industry averages.
B
R
W
Industry
Total sales (millions)
$4.27
$3.91
$4.86
$4.30
Net profit margin
9.55%
9.85%
10.05%
9.65%
Current ratio
1.32
2.02
1.96
1.95
Return on assets
11.0%
12.6%
11.4%
12.4%
Debt/equity ratio
62.5%
44.6%
49.6%
48.3%
Financial leverage
1.40
1.02
1.86
1.33
The objective for this acquisition is assuring a steady source of supply from a stable company. Based on the information above, select the strategy that would fulfill the objective.
A. The corporation should not acquire any of these firms as none of them represents a good risk.
B. Acquire B as both the debt/equity ratio and degree of financial…
Chapter 12 Solutions
ADVANCED ACCOUNTING
Ch. 12 - Prob. 1UTICh. 12 - Prob. 2UTICh. 12 - Prob. 3UTICh. 12 - Prob. 4UTICh. 12 - Prob. 1.1ECh. 12 - Prob. 1.2ECh. 12 - Prob. 1.3ECh. 12 - Prob. 1.4ECh. 12 - Prob. 1.5ECh. 12 - Prob. 1.6E
Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4.1ECh. 12 - Prob. 4.2ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Ratable allocation for nonordinary items. Baxter...Ch. 12 - Prob. 9.1ECh. 12 - Prob. 9.2ECh. 12 - Prob. 9.3ECh. 12 - Prob. 10ECh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7.1PCh. 12 - Prob. 12.7.2PCh. 12 - Prob. 12.7.3PCh. 12 - Prob. 12.8.1PCh. 12 - Prob. 12.8.2P
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