Chapter 13, Problem 13.14P

a

To determine

Enterprise disclosures: ASC 280 provides guidelines for enterprise wide disclosures in the financial statement to help users to understand risks and potential returns. 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 for C.

Answer to Problem 13.14P

Segment profit or loss

Apparel	Building	Chemical	Furniture	Machinery
$110,000	$155,000	$(5,000)	$(13,000)	$97,000

Explanation of Solution

1. Segment disclosure worksheet.

	Operating Segments					Corporate admin $		Intersegment eliminations $	Consolidate $
	Apparel $	Building $	Chemical $	Furniture $	Machinery $		Combined $
Revenues:
Sales:
Non-affiliate	870,000	750,000	55,000	95,000	180,000		1,950,000		1,950,000
Intersegment.			5,000	15,000	140,000		160,000	(160,000)
Total revenue	870,000	750,000	60,000	110,000	320,000		2,110,000	(160,000)	1,950,000
Expenses:
Cost of goods sold	(480,000)	(450,000)	(42,000)	(78,000)	(150,000)		(1,200,000)	160,000	(1,040,000)
Selling expenses	(160,000)	(40,000)	(10,000)	(20,000)	(30,000)		(260,000)		(260,000)
Traceable expenses	(40,000)	(30,000)	(6,000)	(12,000)	(18,000)		(106,000)		(106,000)
Allocated expenses	(80,000)	(75,000)	(7,000)	(13,000)	(25,000)		(200,000)		(200,000)
Segment profits	110,000	155,000	(5,000)	(13,000)	97,000		344,000	0	344,000
Unallocated general expenses						(35,000)	(35,000)		(35,000)
Income before tax	110,000	155,000	(5,000)	(13,000)	97,000	(35,000)	309,000	0	309,000
Assets:
Segments	610,000	560,000	80,000	90,000	140,000		1,480,000		1,480,000
General corporate						125,000	125,000		125,000
Total Assets	610,000	560,000	80,000	90,000	140,000	125,000	1,605,000		1,605,000

Allocated costs:

b

To determine

Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in the financial statement to help users to understand risks and potential returns. 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 segments are separately reportable.

Answer to Problem 13.14P

Only Apparel and Building are separately reportable

Explanation of Solution

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
Apparel	870	45	Yes	110	32	Yes	610	41	Yes
Building	750	38	Yes	155	45	Yes	560	38	Yes
Chemical	55	3	No	(5)	-1.5	No	80	5.4	No
Furniture	95	5	No	(13)	-4	No	90	6	No
Machinery	180	9	No	97	28	Yes	140	9.5	No
Total	1,950	100		344	100		1,480	100

Therefore, only Apparel and Building are separately reportable.

c

To determine

Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in the financial statement to help users to understand risks and potential returns. 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 information about company’s operations in different industry segments as required by ASC 280.

Answer to Problem 13.14P

Segment profit

Apparel	Building	Machinery	Other	Consolidated
$110,000	$155,000	$97,000	$(18,000)	$344,000

Explanation of Solution

	Operating Segments
	Apparel $	Building $	Machinery $	Other $	Elimination $	Consolidated $
Revenues:
Sales:
Non-affiliate	870,000	750,000	180,000	150,000		1,950,000
Intersegment.			140,000	20,000	(160,000)
Total revenue	870,000	750,000	320,000	170,000	(160,000)	1,950,000
Expenses:
Segment profits	110,000	155,000	97,000	(18,000)		344,000
Unallocated general expenses						(35,000)
						309,000
Assets:
Segments	610,000	560,000	140,000	170,000		1,480,000
General corporate						125,000
Total Assets						1,605,000
Depreciation	60,000	50,000	25,000	21,000		156,000
Capital expenditure	20,000	30,000	15,000	0		65,000

c

To determine

Enterprise disclosures: ASC 280 provides guidelines for enterprise-wide disclosures in the financial statement to help users to understand risks and potential returns. 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 information about company’s operations in different industry segments as required by ASC 280.

Answer to Problem 13.14P

Apparel, Building and Machinery can be considered as separately reportable, if building segment had $460,000 in assets instead of $560,000 and furniture segment had $190,000 instead of $90,000.

Explanation of Solution

	Revenue	Segment Profit	Segment Assets
Apparel	$\frac{\$870,000}{\$2,110,000}=41.2\%$	$\frac{\$110,000}{\$362,000}=30.4\%$	$\frac{\$610,000}{\$1,480,000}=41,2\%$
Building	$\frac{\$750,000}{\$2,110,000}=35.6\%$	$\frac{\$155,000}{\$362,000}=42.8\%$	$\frac{\$460,000}{\$1,480,000}=31,1\%$
Chemical	$\frac{\$60,000}{\$2,110,000}=2.8\%$	$\frac{\$5,000}{\$362,000}=1.4\%$	$\frac{\$80,000}{\$1,480,000}=5.4\%$
Furniture	$\frac{\$110,000}{\$2,110,000}=5.2\%$	$\frac{\$13,000}{\$362,000}=3,6\%$	$\frac{\$190,000}{\$1,480,000}=12.8\%$
Machinery	$\frac{\$320,000}{\$2,110,000}=15.2\%$	$\frac{\$97,000}{\$362,000}=26.8\%$	$\frac{\$140,000}{\$1,480,000}=9.5\%$

Result of the 10 percent tests to determine if separately reportable:

	Revenue	Profit	Assets
Apparel	Yes	Yes	Yes
Building	Yes	Yes	Yes
Chemical	No	No	No
Furniture	No	No	Yes
Machinery	Yes	Yes	No