a
Enterprise disclosures: ASC 280 provides guidelines for enterprise wide disclosures in financial statements to help users to understand risk and potential return. ASC 280 established the term enterprise wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The segmental disclosure worksheet and schedule showing which segment is reportable.
a

Answer to Problem 13.13P
Profit as per segment disclosure worksheet
A. $78,000, B. $33,500, C. $50,100 and D. Loss of $13,600
Segment A, B, and C are separately reportable as it passes 10 percent test.
Explanation of Solution
1. Segment disclosure worksheet:
Operating Segments | Corporate admin $ | Intersegment eliminations $ | Consolidated $ | |||||
A $ | B $ | C $ | D $ | Combined $ | ||||
Revenues: | ||||||||
Sales: | ||||||||
Non-affiliate | 280,000 | 130,000 | 340,000 | 60,000 | 810,000 | 810,000 | ||
Intersegment. | 60,000 | 18,000 | 12,000 | 90,000 | (90,000) | |||
Total revenue | 340,000 | 130,000 | 358,000 | 72,000 | 900,000 | (90,000) | 810,000 | |
Operating Costs: | ||||||||
Traceable | (245,000) | (90,000) | (290,000) | (82,000) | (707,000) | 90,000 | (617,000) | |
Allocated | (17,000) | (6,500) | (17,900) | (3,600) | (45,000) | (45,000) | ||
78,000 | 33,500 | 50,100 | (13,600) | 148,000 | 0 | 148,000 | ||
Other items: | ||||||||
General expenses | (20,000) | (20,000) | (20,000) | |||||
Income from continuing operations | 78,000 | 33,500 | 50,100 | (13,600) | (20,000) | 128,000 | 0 | 128,000 |
Assets: | ||||||||
Segments | 400,000 | 105,000 | 500,000 | 75,000 | 1,080,000 | 1,080,000 | ||
General corporate | 120,000 | 120,000 | 120,000 | |||||
Total Assets | 400,000 | 105,000 | 500,000 | 75,000 | 120,000 | 1,200,000 | 1,200,000 |
Allocated costs:
A =
B =
C =
D =
2. Schedule showing reportable segments.
Segment is reportable if segment revenue is greater than or equal to 10 percent
Revenue | Profit | Assets | |||||||
Segment | $,(000’s) | % | Reportable | $,(000’s) | % | Reportable | $,(000’s) | % | Reportable |
A | 280 | 35 | Yes | 78 | 53 | Yes | 400 | 37 | Yes |
B | 130 | 16 | Yes | 33.5 | 22 | Yes | 105 | 10 | Yes |
C | 340 | 42 | Yes | 50.1 | 34 | Yes | 500 | 46 | Yes |
D | 60 | 7 | No | (13.6) | -9 | No | 75 | 7 | No |
Total | 810 | 100 | 148 | 100 | 1,080 | 100 |
Segment D does not qualify 10 percent test, hence not reportable. All other segments A, B, C are reportable.
b
Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in financial statements to help users to understand risk and potential return. ASC 280 established the term enterprise-wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The schedule showing which geographical areas are reportable when Division A is in domestic area, and each of the other divisions operates in separate foreign country.
b

Answer to Problem 13.13P
Domestic Segment A and Foreign Segment B and C are separately reportable.
Explanation of Solution
Schedule showing reportable segments (10 percent materiality test is applied to check the reportibiliy)
Segment is reportable if segment revenue is greater than or equal to 10 percent.
Revenue | Long − lived assets | |||||
Segment | $,(000’s) | % | Reportable | $,(000’s) | % | Reportable |
A | 280 | 35 | Yes | 200 | 37 | Yes |
B | 130 | 16 | Yes | 52.5 | 10 | Yes |
C | 340 | 42 | Yes | 250 | 46.3 | Yes |
D | 60 | 7 | No | 37.5 | 7 | No |
Total | 810 | 100 | 540 | 100 |
Domestic Segment A and Foreign Segment B and C are separately reportable.
c
Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in financial statements to help users to understand risk and potential return. ASC 280 established the term enterprise-wide disclosure standards to provide users more information about the company’s risks. These disclosures are typically made in a footnote to the financial statements.
The amount of sales to an outside customer that would cause that customer to be classified as a major customer.
c

Answer to Problem 13.13P
The amount of sales that would classify a customer as a major customer is $81,000.
Explanation of Solution
ASC 280 does not provide any separate materiality test for the classification of a major customer, but most of the corporate use a 10 percent materiality test to classify major customers.
In the case of P, the sales greater or equal to $81,000 to a single customer would be regarded as major customer $81,000 =
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Chapter 13 Solutions
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