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FinAcc3 Chap9 PDF

This chapter discusses interim reporting and operating segments. It provides examples of income statements for three companies - Angel, Galaxy and Oliver - for different reporting periods. It also covers the criteria for determining reportable operating segments, including revenue, profit, asset thresholds and the 75% test. Multiple choice questions assess understanding of interim reporting requirements and identifying reportable operating segments.

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87 views

FinAcc3 Chap9 PDF

This chapter discusses interim reporting and operating segments. It provides examples of income statements for three companies - Angel, Galaxy and Oliver - for different reporting periods. It also covers the criteria for determining reportable operating segments, including revenue, profit, asset thresholds and the 75% test. Multiple choice questions assess understanding of interim reporting requirements and identifying reportable operating segments.

Uploaded by

Joana Magtubo
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER 9

INTERIM REPORTING AND OPERATING SEGMENTS

9-1 Angel Company


Angel Company
Statement of Comprehensive Income
For the Quarter Ended September 30, 2012

Net sales (30% x 9,000,000) P 2,700,000


Cost of goods sold 1,674,000
Gross profit (38% x 2,700,000) P 1,026,000
Operating expenses * (270,000)
Gain on sale of equipment 280,000
Profit from Continuing Operations P 1,036,000
Income Tax 310,800
Net profit (loss) P (725,200)

*Operating Expenses:
Variable = 30% x 600,000 P180,000
Fixed = (960,000 – 600,000) /4 90,000
Total P270,000

9-2 Galaxy Company


Galaxy Company
Statement of Comprehensive Income
For the Month of October 2012

Net sales P 239,100


Cost of goods sold:
Merchandise Inventory, October 1 P 280,000
Purchases 215,000
Total goods available for sale 495,000
Merchandise inventory, October 31 372,600
Cost of sales P 122,400
Gross profit P 116,700
Selling expenses (54,700)
General and administrative expenses (19,000)
Net profit P 43,000

9-3 Blue Bay

Minimum required assets P5,000,000


Minimum required revenue 8,600,000
Minimum required operating result (profit or loss) 2,000,000

Reportable segments are A, B, C, D and E. The 75% test has also been met.

9-4 Minimum operating result (profit or loss) P1,100,000

Reportable segments based on the above test are B, D and E.

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Chapter 9 – Interim Reporting and Operating Segments

9-5 Red Company

Minimum required revenues P3,275,000


Minimum required operating profit 580,000
Minimum required identifiable assets 6,800,000

Identified reportable segments, based on any of the above tests: A, B, C, D and E

9-6 Oliver Company

Revenue (40% x 7,500,000) P3,000,000


Traceable costs (1,750,000)
Allocated common costs (1,250,000/2,500,000) x 1,500,000) ( 750,000)
Profit – Segment 1 P 500,000

Multiple Choice

Interim Reporting
MC1 A
MC2 D
MC3 B
MC4 B
MC5 A
MC6 B
MC7 B
MC8 C
MC9 B
MC10 A
MC11 B
MC12 B
MC13 C 320,000 X ¼ = 80,000
MC14 A End of January = 200,000 + 50,000 – 192,000 = 58,000
End of February = 58,000 + 380,000 – 408,000 = 30,000
End of March = 30,000 + 704,000 – 604,000 = 130,000
MC15 C (600,000 x ½) + (1,200,000 x ½) = 900,000
MC16 A
MC17 D
MC18 A (25,000,000 X 10%) – (10,000,000 X 5%) = 2,000,000
MC19 D (45,000,000 X 10%) – (20,000,000 X 5%) = 3,500,000
MC20 A 100,000 x 12 = 1,200,000, which is lower than the cost of P1,400,000

Operating Segments
MC21 A
MC22 C
MC23 B
MC24 C
MC25 B
MC26 A
MC27 D
MC28 C 10% (1,000,000 + 300,000)
MC29 D 500,000 – 225,000 – (240,000 X 500,000/1,500,000)

53
Chapter 9 – Interim Reporting and Operating Segments

MC30 A 2,000,000 – 900,000 – (3,000,000 X 2M/10M)


MC31 C 10% (153,000,000 – 140,000,000)
MC32 B 4,000,000 – 2,200,000 – (1,200,000 X 1,800,000/3,000,000)=1,080,000
MC 33 B

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