ADVANCED ACCOUNTING
12th Edition
ISBN: 9780357671221
Author: FISCHER
Publisher: CENGAGE L
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Chapter 12, Problem 9.3E
To determine
Pre-Tax profit also known as Profit before Tax (PBT) is defined as the profit earned before the company paid income taxes.All expenses are deducted by PBT from revenue including interest expenses and operating expenses.
The four items that would likely compromise reconciliation of the total reportable segment amounts.
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Franklin 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
$106,280
59,575
46,705
Sales revenue
Cost of goods sold
Gross margin
Operating expenses
Selling expenses
Depreciation expense
(2,650)
(4,015)
40,040
Operating income
Nonoperating item
( 4,900)
$ 35,140
Loss on sale of land
Net income
BOWMAN DIVISION
Balance Sheet
As of December 31, Year 2
Assets
Cash
$ 12,592
Accounts receivable
Merchandise inventory
Equipment less accumulated depreciation
Nonoperating assets
40,456
37,100
90,358
9,700
Total assets
$190,206
Liabilities
$ 9,567
Accounts payable
Notes payable
Stockholders' equity
64,000
78,000
38,639
Common stock
Retained earnings
Total liabilities and stockholder's equity
$190,206
What amount should be disclosed as Dae-su's profit for the current
year? *
Dae-su Company has four manufacturing divisions, each of which has been determined to be a
reportable segment. Common costs are appropriately allocated on the basis of each division's
sales in relation to Dae-su's aggregate sales.
Dae-su's 4th division accounted for 40% of Dae-su's total sales in the current year. For the current
year, 4th division had sales of P8,000,000 and traceable costs of P4,800,000. In addition, the 4th
division incurred interest expense of P640,000.
In the current year, Dae-su incurred costs of P800,000 that were not directly traceable to any of
the divisions.
It is an entity policy that interest expense is included in the measure of profit or loss that is
reviewed by the chief operating decision maker.
O 3,200,000
O 3,000,000
O 2,880,000
O 2,240,000
Evaluate the performance of the two divisions assuming Lasky Manufacturing uses economic value added (EVA).
Note: Note: Enter answers in thousands of dollars. Round your answers to 1 decimal place.
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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