Perform testing procedures to determine company E’s reportable operating segments.

Question

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Answer 1

Question

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

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Answer 2

Question

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

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Answer 3

Question

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

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Answer 4

Question

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

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Answer 5

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

Answer 6

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

Answer 7

Chapter 8, Problem 35P

To determine

Perform testing procedures to determine company E’s reportable operating segments.

Answer 8

Expert Solution & Answer

Answer to Problem 35P

Plastics and metals are the reportable operating segments.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Three testing procedures are performed to determine company E’s reportable operating segments.

1. Revenue test

2. Profit or loss test

3. Asset test

1. Revenue Test

Calculate total revenue of segments

	Plastics	Metals	Lumber	Paper	Finance

Sales to outside parties	$ 6,694	$ 2,354	$ 711	$ 422	$ –0–
Intersegment transfers	$ 148	$ 173	$ 138	$ 150	$ –0–
Interest income from outside parties	$ –0–	$ 34	$ 21	$ –0–	$ 42
Interest income from intersegment loans	$ –0–	$ –0–	$ –0–	$ –0–	$ 201
Total revenue of segment	$ 6,842	$ 2,561	$ 870	$ 572	$ 243

Table: (1)

Perform revenue test

	Revenue	Percentage
Plastics	$ 6,842	61.70%
Metals	$ 2,561	23.09%
Lumber	$ 870	7.84%
Paper	$ 572	5.15%
Finance	$ 243	2.19%
Total revenue	$ 11,088	100%

Table: (2)

Segments with percentage more than 10% are reportable. These are plastics and metals.

2. Profit or loss test

Calculation of expenses of segments

	Plastics	Metals	Lumber	Paper	Finance

Operating expenses	$ 4,214	$ 1,762	$ 1,066	$ 654	$ 31
Interest expense	$ 76	$ 31	$ 66	$ 28	$ 102
Total expense of segments	$ 4,290	$ 1,793	$ 1,132	$ 682	$ 133

Table: (3)

Perform profit and loss test by calculating profit or loss

	Revenues	Expense	Profit	Loss	Percentage
Plastics	$ 6,842	$ 4,290	$ 2,552		74.40%
Metals	$ 2,561	$ 1,793	$ 768		22.39%
Lumber	$ 870	$ 1,132		$ (262)	(7.63%)
Paper	$ 572	$ 682		$ (110)	(3.20%)
Finance	$ 243	$ 133	$ 110		3.20%
Total	$ 11,088	$ 8,030	$ 3,430	$ (372)	100%

Table: (4)

Segments of 10% or more of profits are reportable. These are plastics and metals.

3. Asset Test

Calculate assets of segments

	Plastics	Metals	Lumber	Paper	Finance

Tangible assets	$ 1,501	$ 3,196	$ 524	$ 771	$ 179
Intangible assets	$ 87	$ 403	–0–	$ 63	–0–
Intersegment loans (debt)	–0–	–0–	–0–	–0–	$ 706
Total assets of segments	$ 1,588	$ 3,599	$ 524	$ 834	$ 885

Table: (5)

Perform asset test:

	Assets	Percentage
Plastics	$ 1,588	21.37%
Metals	$ 3,599	48.43%
Lumber	$ 524	7.05%
Paper	$ 834	11.22%
Finance	$ 885	11.91%
Total	$ 7,430	100%

Table: (6)

Segments more than 10% of assets are reportable. These are plastics, metals, paper, and finance.

Analysis of tests

Tests	Plastics	Metals	Lumber	Paper	Finance

Revenue Test	✓	✓
Profit or loss Test	✓	✓
Asset Test	✓	✓		✓	✓

Table: (7)

Plastics and metals are the reportable operating segments.

Answer 12

Ch. 8 - Prob. 1Q Ch. 8 - Prob. 2Q Ch. 8 - Prob. 3Q Ch. 8 - The management approach requires a firm to define...Ch. 8 - What is an operating segment?Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

Perform testing procedures to determine company E’s reportable operating segments.

Solution Summary: The author explains how three testing procedures are performed to determine company E's reportable operating segments.

Perform testing procedures to determine company E’s reportable operating segments.

Answer to Problem 35P

Explanation of Solution

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Chapter 8 Solutions