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6806 Operating Segment and Interim Reporting

This document contains a review exam on operating segment and interim financial reporting. It includes 8 multiple choice questions that assess the identification of reportable operating segments based on revenue, profit and asset thresholds, as well as the proper recognition and allocation of expenses and income items for interim financial reporting purposes.

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Esse Valdez
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165 views

6806 Operating Segment and Interim Reporting

This document contains a review exam on operating segment and interim financial reporting. It includes 8 multiple choice questions that assess the identification of reportable operating segments based on revenue, profit and asset thresholds, as well as the proper recognition and allocation of expenses and income items for interim financial reporting purposes.

Uploaded by

Esse Valdez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/ESCALA/SANTOS/DELA CRUZ

OPERATING SEGMENT AND INTERIM REPORTING


1. An entity identified the following segments for the current year:
Segment Revenue Profit Assets
A 10,000,000 1,750,000 20,000,000
B 8,000,000 1,400,000 17,500,000
C 6,000,000 1,200,000 12,500,000
D 3,000,000 550,000 7,500,000
E 4,000,000 575,000 5,500,000
F 2,000,000 525,000 3,000,000
What are the reportable segments?
a. Segments A, B and C
b. Segments A, B, C and D
c. Segments A, B, C, D and E
d. Segments A, B, C, D, E and F

2. An entity reported the following segment profit or loss for the current year:
Segment 1 7,000,000 profit
Segment 2 3,000,000 profit
Segment 3 4,000,000 loss
Segment 4 1,000,000 profit
Segment 5 500,000 loss
What are the reportable segments?
a. Segments 1, 2, 3,4 and 5
b. Segments 1 and 2
c. Segments 1, 2 and 3
d. Segments 1, 2, 3 and 4

3. An entity reported revenue of P50,000,000, excluding intersegment sales of P10,000,000, expenses


of P47,000,000 and net income of P3,000,000 for the current year. Expenses included payroll costs
of P15,000,000. The combined assets of all segments totaled P45,000,000.
1. What is the minimum amount of sales to a major customer?
a. 5,000,000
b. 4,000,000
c. 4,500,000
d. 6,000,000
2. What is the minimum amount of external revenue to be disclosed by reportable segments?
a. 30,000,000
b. 45,000,000
c. 33,750,000
d. 37,500,000

4. An entity and its divisions reported the following for the current year:
Sales to unaffiliated customers 40,000,000
Intersegment sales of products similar to those sold to unaffiliated customers 15,000,000
Interest earned on loans to other operating segments 5,000,000
The entity and all of its divisions are engaged solely in manufacturing operations. To qualify as
reportable segment, the segment revenue should at least be what amount?
a. 6,000,000
b. 4,500,000
c. 5,500,000
d. 4,000,000

6806
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5. An entity operates in the travel industry and incurs costs evenly throughout the year. Advertising
cost of P2,500,000 was incurred on March 1, 2021, and staff bonuses are paid at year-end based on
sales.
Staff bonuses are expected to be around P20,000,000 for the year. The staff bonuses are allocated
uniformly over four quarters of the year.
What total amount of expenses should be included in the quarterly financial report ending March
31, 2021?
a. 5,000,000
b. 7,500,000
c. 5,625,000
d. 2,500,000

6. An entity reported P950,000 net income for the quarter ended September 30, 2021 which included
the following after-tax items:
A P600,000 expropriation gain realized in May 2021 was allocated equally to the second, third and
fourth quarters of 2021.
A P150,000 cumulative effect loss resulting from a change in inventory valuation method was
recognized on August 31, 2021.
In addition, the entity paid P480,000 on February 1, 2021, for 2021 calendar-year real property tax.
Of this amount, P120,000 was allocated to the third quarter of 2021.
What is the net income for the quarter ended September 30, 2021?
a. 1,150,000
b. 1,100,000
c. 500,000
d. 900,000

7. An entity prepares quarterly interim financial reports. The entity sells electrical goods and normally
5% of customers claim on their warranty.
The provision in the first quarter was calculated at 5% of sales to date which amounted to
P10,000,000.
However, in the second quarter, a design fault was found and warranty claims were expected to be
10% for the whole year. Sales for the second quarter amounted to P15,000,000.
1. What amount of warranty expense should be reported for the first quarter?
a. 1,000,000
b. 750,000
c. 500,000
d. 250,000
2. What amount of warranty expense should be reported for the second quarter?
a. 2,000,000
b. 1,250,000
c. 1,500,000
d. 750,000

8. A calendar-year corporation had the following income before tax provision and estimated effective
annual tax rates for the first three quarters:
Quarter Income before income tax Effective annual tax rate
First 5,000,000 30%
Second 8,000,000 30%
Third 7,000,000 25%
What is the income tax expense for the third quarter?
a. 1,750,000
b. 2,100,000
c. 1,100,000
d. 5,000,000
END 6806

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