What information should a public company present about revenues from its reporting segments?
Answer(s): A
Choice "a" is correct. Unaffiliated customers sales and intracompany sales must be disclosed separately.
Taft Corp. discloses supplemental industry segment information. The following information is available for 1992:Additional 1992 expenses, not included above, are as follows:Indirect operating expenses $7,200General corporate expenses 4,800Segment C's 1992 operating profit was:
Choice "a" is correct. $5,000 operating profit for Segment C. Rule: Operating profit by segments is based on the measure of profit reported to the "Chief Operating Decision Maker."Interest expense, income taxes, and general corporate expenses are not allocated to the divisions solely for the purposes of segment disclosures; they may be allocated if that is how the segments report to the "Chief Operating Decision Maker."
In financial reporting of segment data, which of the following items is always used in determining a segment's operating income?
Answer(s): B
Choice "b" is correct. Sales to other segments would be used in determining a segment's operating income.Rule: Equity in net income of another company, general corporate expenses, interest, income tax expense, and gains or losses on discontinued operations are all not included in segment profit unless they are included in the determination of segment profit reported to the "Chief Operating Decision Maker."
Opto Co. is a publicly-traded, consolidated enterprise reporting segment information. Which of the following items is a required enterprise-wide disclosure regarding external customers?
Choice "a" is correct. In order to conform to GAAP, financial statements for public business enterprises must report segment information about a company's major customers if that customer provides 10% or more of the combined revenue, internal and external, of all operating segments. Choice "b" is incorrect. Revenue is 10% of ALL operating segments not "a particular" segment. Choice "c" is incorrect. Disclosure is not at management's discretion.Choice "d" is incorrect. Disclosure is required.
Which of the following qualifies as an operating segment?
Choice "b" is correct. Assets of the North American segment exceed 10% combined assets of all operating segments.Choice "a" is incorrect. Corporate headquarters in not considered a segment. Choice "c" is incorrect. The South American segment does not meet any of the 10% minimums (Revenue, P&L or Assets).Choice "d" is incorrect. Eastern Europe segment does not report to the chief operating officer.
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