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Geraldine E. Martinez, Bsa-Iii Chapter 8 - Problem 7

The document contains examples and solutions to accounting problems related to identifying reportable segments, calculating various expenses, gains/losses, and income tax amounts. Key details include identifying segments A, B, D, and F as reportable based on specified percentage tests, and calculating insurance, property tax, depreciation, bonus, operating loss, casualty loss, gain/loss, income tax, and weighted average tax rate amounts for various companies based on time periods and other financial information provided.

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44 views6 pages

Geraldine E. Martinez, Bsa-Iii Chapter 8 - Problem 7

The document contains examples and solutions to accounting problems related to identifying reportable segments, calculating various expenses, gains/losses, and income tax amounts. Key details include identifying segments A, B, D, and F as reportable based on specified percentage tests, and calculating insurance, property tax, depreciation, bonus, operating loss, casualty loss, gain/loss, income tax, and weighted average tax rate amounts for various companies based on time periods and other financial information provided.

Uploaded by

Geraldine Martinez Donaire
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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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GERALDINE E.

MARTINEZ, BSA-III
Chapter 8 - Problem 7
1 The reportable segments are segments A, C, D and F.
2 Solutions:
Operating segments Revenue test Profit test Asset test
A 29.41% 23.26% 43.01%
B 14.71% 13.95% 10.75%
C 8.82% 3.49% 8.60%
D 14.71% 5.81% 18.28%
E 5.88% 6.98% 8.60%
F 26.47% 46.51% 10.75%

Answer: The reportable segments are segments A, B, D, and F.

3. Solutions:
Requirement (a):
Operating segments Total revenue Revenue test Identifiable assets Asset test
A 1,400,000 29.72% 5,000,000 45.45%
B 1,000,000 21.23% 1,300,000 11.82%
C 1,050,000 22.29% 900,000 8.18%
D 760,000 16.14% 1,800,000 16.36%
E 300,000 6.37% 800,000 7.27%
F 200,000 4.25% 1,200,000 10.91%
Totals 4,710,000 100% 11,000,000 100%

Operating Segments Profit Loss P/L test


A - 300,000 56.60%
B - 180,000 33.96%
C 220,000 41.51%
D 270,000 50.94%
E - 20,000 3.77%
F - 30,000 5.66%
Totals 490,000 - 530,000

The reportable segments are segments A, B, C, D, and F.

Requirement (b): External


Operating Segments revenue
A 1,200,000
B 900,000
C 800,000
D 600,000
E
F 200,000
Totals 3,700,000
Divided by: 4,000,000
92.50% YES

Requirement (c):
Total external revenues (4M*10%) 400,000
Chapter 8 - Problem 9
Correy Corp.
1 Five

Aria Corp.
2 Sales to unaffiliated customers
Intersegment sales to sold unaffiliated customers
Total combined sales

Reportable segment

Grumm Corp.
3 Revenue

Sales to single customer amount to at least

4 Sales to external to external customers

External revenue reported by operating segments amounted to at least

Taylor Corp.
5 Segment profit
C.

2,000,000.00
600,000.00
2,600,000.00
0.10
260,000.00 B.

50,000,000.00
10%
5,000,000.00 D.

30,000,000.00
75%
22,500,000.00 A.

40,600.00 D.
Chapter 9 - Problem 5
Farr Corp.
1 Casualty loss 70,000.00
Insurance expense for 1st quarter (100k*1/4) 25,000.00 B.

Vilo Corp.
2 Depreciation expense 60,000.00
Bonuses 120,000.00
Total 180,000.00
Divided by 2
Total expense, 6/30/20x6 90,000.00 C.

Rex Corp.
3 Property taxes (180k*1/4) 45,000.00
Cost benefiting the remainder of the year (300k*1/3) 100,000.00
Total expense for 2nd quarter 145,000.00 B.

Wilson Corp.
4 First quarter - loss 50,000.00
Third quarter - gain 50,000.00 C.

Flint Corp
5 Gain on sale of asset 90,000.00
Opearting losses:
January 20,000.00
February 30,000.00 - 50,000.00
Gain from disposal 40,000.00 B

Tech Co.
6 Income before tax 200,000.00
Multiply by: Average annual income tax rate 25%
Income tax expense 50,000.00 C.

CD Co.
7 The entire write-down of 900k is recognized on 2nd quarter June 30. C.

Eureka Corp.
8 First quarter - loss 50,000.00
Third quarter - gain 60,000.00 D.

Ancing Corp.
9 First quarter - loss 50,000.00
Third quarter - gain 50,000.00 C.

Sunrise Co.
10 Estimated annual profit before tax 1,200,000.00
Less: Opearting loss carryforward (120k/30%) 400,000.00
Total 800,000.00
Multiply by 30%
Estimated annual income tax expense 240,000.00
Divided by: Estimated annual profit before tax 1,200,000.00
Weighted average income tax rate 20%

1st quarter 2nd quarter 3rd quarter


Profits before taxes 350,000.00 200,000.00 400,000.00
Multiply by: Weighted average tax rate 20% 20% 20%
Income tax expense 70,000.00 40,000.00 80,000.00 B.

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