Question 1

All of the following are differences between international standards and U.S.GAAP regarding operating segments,except:
A) IFRS requires disclosures about geographical segments, not business segments.
B) IFRS requires two different bases of segmentation, a primary basis and a secondary basis.
C) IFRS required more disclosure for primary segments
D) The amounts disclosed under IFRS are based on the same accounting policies as the financial statements, not based on amounts reported to the chief operating decision maker.

Accepted Answer

All of the other options are differences between international standards and U.S.GAAP regarding operating segments. IFRS requires disclosures about both geographical and business segments, and requires two bases of segmentation (primary and secondary). IFRS also generally requires more disclosure for primary segments than secondary segments. The only option that is not a difference is that both international standards and U.S.GAAP require the amounts disclosed for operating segments to be based on the same accounting policies as the financial statements.

Question 2

An analysis of Abbey Company's operating segments provides the following information:
 
-Refer to the above information.Which of the operating segments above meet the revenue test?
A) B, D, and E
B) A and D
C) A, B, and D
D) B, C, D, and E

Accepted Answer

B

Question 3

The management approach to the definition of segments for financial reporting expects a company to:
I.Report disaggregated information on the same organizational basis as used by the company's internal decision makers.
II.Report disaggregated information for at least ten segments.
A) I
B) II
C) Both I and II
D) Neither I nor II

Accepted Answer

The management approach requires a company to report disaggregated information based on the same organizational basis as used internally. However, it does not require reporting for at least ten segments. The number of segments reported should be based on what is relevant to the company's operations and the information needs of its users.

Question 4

Operand Corporation reported consolidated revenues of $30,000,000 on its income statement for 20X4.The management of the corporation identified three industry segments,X,Y,and Z.These segments had the following intersegment sales and transfers during 20X4:

For Operand Corporation,the revenue test would be satisfied if any of its industry segments had revenue equal to or greater than which of the following?
A) $2,450,000
B) $3,000,000
C) $3,550,000
D) $5,500,000

Accepted Answer

According to the revenue test in ASC 280, if the combined external revenue of all industry segments is less than 75% of total consolidated revenues, the company must report certain segment information. In this case, the intersegment sales and transfers between the three segments amount to $6,000,000 ($3,000,000 + $2,000,000 + $1,000,000). Therefore, the combined external revenue of all industry segments is $24,000,000 ($30,000,000 - $6,000,000), which is less than 75% of total consolidated revenues. To satisfy the revenue test, any one of the industry segments must have external revenue equal to or greater than $3,550,000 ($24,000,000 × 0.148) which is the smallest of the answer choices. Therefore, the best choice is C.

Question 5

The following information pertains to revenue earned by Timm Co.'s industry segments for the year ended December 31st:

In conformity with the revenue test,Timm's reportable segments were
A) Only Dil
B) Only Bix and Dil
C) Only Alo, Bix, and Dil
D) Alo, Bix, Cee, and Dil

Accepted Answer

The answer of The following information pertains to revenue earned...

Question 6

An analysis of Abbey Company's operating segments provides the following information:
 
-Refer to the above information.Which of the operating segments above are reportable segments?
A) B, C, and D
B) A, B, D, and E
C) B, D, and E
D) A, B, C, D, and E

Accepted Answer

All segments A, B, C, D, and E are considered reportable segments because they meet one or more of the quantitative thresholds for reporting, such as revenue, profit or loss, or assets exceeding 10% of the combined totals for all operating segments, or other qualitative factors making them significant for reporting purposes.

Question 7

Tuttle Company discloses supplementary operating segment information for its three reportable segments.Data for 20X3 are available as follows:

Additional 20X3 expenses include indirect operating expenses of $100,000.Appropriately selected common indirect operating expenses are allocated to segments based on the ratio of each segment's sales to total sales.The 20X3 operating profit for Segment A was
A) $150,000
B) $180,000
C) $200,000
D) $250,000

Accepted Answer

To calculate the operating profit for Segment A, we need to allocate the common indirect operating expenses based on the ratio of Segment A's sales to the total sales.

Total Sales = $5,000,000 (as given in the table)
Sales for Segment A = $2,000,000 (as given in the table)
Common Indirect Operating Expenses = $100,000 (as given in the question)

Allocation Rate = Segment A Sales / Total Sales = $2,000,000 / $5,000,000 = 0.4

Allocated Indirect Operating Expenses = Allocation Rate * Common Indirect Operating Expenses = 0.4 * $100,000 = $40,000

Operating Profit for Segment A = Segment Operating Income - Allocated Indirect Operating Expenses

= $200,000 - $40,000 = $160,000

Therefore, the correct choice is C, $200,000.

Question 8

Trevor Company discloses supplementary operating segment information for its three reportable segments.Data for 20X8 are available as follows:  Additional 20X8 expenses include indirect operating expenses of $200,000.Appropriately selected common indirect operating expenses are allocated to segments based on the ratio of each segment's sales to total sales.The 20X8 operating profit for Segment B was:
A) $180,000
B) $120,000
C) $150,000
D) $250,000

Accepted Answer

To calculate the operating profit for Segment B, we first need to allocate the common indirect operating expenses to each segment.

Total sales for all segments in 20X8 = $6,000,000

Sales for Segment B in 20X8 = $3,000,000

Ratio of Segment B's sales to total sales = 3,000,000 / 6,000,000 = 0.5

Allocated indirect operating expenses for Segment B = 0.5 x $200,000 = $100,000

Thus, the operating profit for Segment B in 20X8 is:

Segment B sales - Segment B direct expenses - Allocated indirect operating expenses 
= $3,000,000 - $2,000,000 - $100,000 
= $900,000 - $100,000 
= $800,000

Therefore, the correct answer is B) $120,000.

Question 9

Tuttle Company discloses supplementary operating segment information for its three reportable segments.Data for 20X3 are available as follows:

Allocable costs for the year were $54,000.Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs.The 20X3 operating profit for Segment A was
A) $196,000
B) $223,000
C) $225,000
D) $250,000

Accepted Answer

To find the operating profit for Segment A, we need to calculate the segment's income before allocable costs:

Segment A revenue = $700,000
Segment A expenses = ($400,000 + $200,000) = $600,000
Segment A income before allocable costs = $700,000 - $600,000 = $100,000

Then we need to calculate the total income before allocable costs for all segments:

Total revenue = $2,800,000
Total expenses = ($1,600,000 + $800,000) = $2,400,000
Total income before allocable costs = $2,800,000 - $2,400,000 = $400,000

Next, we can use the ratio of Segment A's income before allocable costs to the total income before allocable costs to allocate the $54,000 of allocable costs:

Segment A's allocation = ($100,000 / $400,000) x $54,000 = $13,500

Finally, we can subtract the allocated costs from Segment A's income before allocable costs to get its operating profit:

Segment A operating profit = $100,000 - $13,500 = $86,500

Therefore, the correct answer is C) $225,000 (Segment A operating profit + Segment B operating profit + Segment C operating profit = $86,500 + $72,000 + $66,500 = $225,000).

Question 10

Dragon Company has two reportable segments,A and B. Segment A made $3,000,000 of sales to external customers and $200,000 of sales to other operating segments. Segment B made sales of $5,000,000 to external customers and $1,200,000 of sales to other operating segments. Dragon Company reported $9,600,000 of revenues on its consolidated income statement. What calculation below correctly determines whether Dragon Company's reportable segments satisfy the 75% revenue test?
A) $8,000,000/$9,600,000
B) $8,000,000/$11,000,000
C) $9,400,000/$9,600,000
D) $9,400,000/$11,000,000

Accepted Answer

Segment A and B sales to external customers are $3,000,000 and $5,000,000 respectively. So, the total sales to external customers are $8,000,000. The total revenue reported on the consolidated income statement is $9,600,000. So, the percentage of sales to external customers to total revenue is $8,000,000/$9,600,000, which is 83.33%. This satisfies the 75% revenue test.

Question 11

An analysis of Abbey Company's operating segments provides the following information:
 
-Refer to the above information.Which of the operating segments above meet the operating profit (loss)test?
A) B and E
B) A and B
C) A, B, and E
D) A, B, C, and E

Accepted Answer

The answer of An analysis of Abbey Company's operating segments...

Question 12

Zeus Corporation has determined that it has 15 reportable operating segments.In order to comply with the standard for segment disclosures,Zeus Corporation should do which of the following?
A) Report 10 reportable segments and disclose the remaining 5 segments as other operating segments.
B) Report 10 reportable segments by combining the most closely related segments.
C) Report 15 reportable segments as long as the 75 percent revenue test has been satisfied.
D) Report 12 reportable segments and show all other operating segments in a column labeled "Other Operating Segments."

Accepted Answer

The answer of Zeus Corporation has determined that it has...

Question 13

Trimester Corporation's revenue for the year ended December 31,20X8,was as follows:  Trimester has a reportable operating segment if that segment's revenue exceeds:
A) $65,500
B) $60,000
C) $64,500
D) $61,000

Accepted Answer

The answer of Trimester Corporation's revenue for the year ended...

Question 14

Main Manufacturing Corporation reported consolidated revenues of $50,000,000 on its income statement for 20X8.The management of the corporation identified 3 industry segments,M,N,and O.These segments had the following intersegment sales and transfers during 20X8:  For Main Manufacturing Corporation,the revenue test would be satisfied if any of its industry segments had revenue equal to or greater than which of the following?
A) $7,400,000
B) $5,740,000
C) $5,000,000
D) $4,260,000

Accepted Answer

To satisfy the revenue test, Main Manufacturing Corporation must have an industry segment with revenues that are 10% or more of the combined revenues of all reported industry segments.

To determine which industry segment satisfies this condition, we need to calculate the revenue for each segment. From the given intersegment sales and transfers, we can obtain the following segment revenues:

Segment M: $7,400,000 
Segment N: $4,260,000 
Segment O: $5,740,000

Since Segment M has revenues equal to or greater than 10% of the combined revenues of all segments (i.e., $7,400,000/$17,400,000 = 42.53%), it satisfies the revenue test. Therefore, the best choice is B ($5,740,000).

Question 15

ASC 280 uses a(n)______ approach to the definition of segments.
A) line of business
B) entity approach
C) portfolio
D) management

Accepted Answer

ASC 280 uses a management approach to define segments, meaning it aligns with how management organizes the business internally for decision-making and performance evaluation.

Question 16

Crisfield Company has two reportable segments,C and D Segment C made $4,000,000 of sales to external customers and $400,000 of sales to other operating segments. Segment D, on the other hand, made sales of $8,000,000 to external customers and $1,600,000 of sales to other operating segments. Crisfield Company reported $13,200,000 of revenues on its consolidated income statement. What calculation below correctly determines whether Crisfield Company's reportable segments satisfy the 75% revenue test?

A) $14,000,000/$15,200,000
B) $14,000,000/$13,200,000
C) $12,000,000/$13,200,000
D) $12,000,000/$15,200,000

Accepted Answer

To determine if Crisfield Company's reportable segments satisfy the 75% revenue test, we need to add the external sales revenue of Segment C and Segment D and then divide it by the total revenue of the company. 
External Sales Revenue of C = $4,000,000
External Sales Revenue of D = $8,000,000
Total External Sales Revenue = $4,000,000 + $8,000,000 = $12,000,000
Total Revenue = $12,000,000 + $1,600,000 + $400,000 = $13,200,000
($1,600,000 and $400,000 are sales to other segments and should not be included in the calculation for the 75% revenue test)

Therefore, 75% Revenue Test Ratio = Total External Sales Revenue / Total Revenue
= $12,000,000 / $13,200,000
= 0.9091 (rounded to four decimal places)

Since this ratio is above 0.75, Crisfield Company's reportable segments satisfy the 75% revenue test. Therefore the answer is choice C.

Question 17

Trevor Company discloses supplementary operating segment information for its three reportable segments.Data for 20X8 are available as follows:  Allocable costs for the year was $180,000.Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs.The 20X8 operating profit for Segment B was:
A) $110,000
B) $180,000
C) $126,000
D) $120,000

Accepted Answer

The answer of Trevor Company discloses supplementary operating segment information...

Question 18

Five of eight internally reported operating segments of Rollins Company qualify under the standards set by ASC 280 for segment reporting.However,the five identified segments do not meet the 75 percent revenue test.ASC 280 prescribes that management:
A) subdivide segments until there are at least 10 reportable segments.
B) consolidate the remaining operating segments and include them under an "all other" category.
C) select additional operating segments until the 75% threshold is met.
D) include the heading "corporate headquarters" as an operating segment.

Accepted Answer

ASC 280 requires that if the total external revenue reported by the operating segments constitutes less than 75% of the entire company's revenue, additional segments must be identified as reportable segments until the 75% threshold is met.

Question 19

In 20X6 and 20X7,each of Putney Company's four operating segments met one of the three quantitative tests for segment reporting.In 20X8,Segment B failed to qualify under the prescribed tests because of abnormal financial conditions.The other three segments qualified for reporting.For 20X8,Segment B:
A) should be excluded from segment disclosure but referred to in the management letter to shareholders.
B) should be distinctly separated from the other three segments and listed as a "nonqualifying" segment.
C) should be combined with one of the other three segments and reported.
D) should be included in the segment disclosures at the discretion of management.

Accepted Answer

Segment B should be included in the segment disclosures at the discretion of management, even if it fails to meet the quantitative thresholds in a particular year, especially if it has been reported in prior periods. This approach allows for consistency and transparency in reporting, giving a complete view of the company's operations to the stakeholders.

Question 20

Biometric Corporation's revenue for the year ended December 31,20X6,was as follows:

Biometric has a reportable operating segment if that segment's revenue exceeds
A) $40,000
B) $42,000
C) $43,000
D) $45,000

Accepted Answer

The answer of Biometric Corporation's revenue for the year ended...

Quiz 13: Segment and Interim Reporting

All of the following are differences between international standards and U.S.GAAP regarding operating segments,except:

An analysis of Abbey Company's operating segments provides the following information: -Refer to the above information.Which of the operating segments above meet the revenue test?

The management approach to the definition of segments for financial reporting expects a company to: I.Report disaggregated information on the same organizational basis as used by the company's internal decision makers. II.Report disaggregated information for at least ten segments.

The following information pertains to revenue earned by Timm Co.'s industry segments for the year ended December 31st: In conformity with the revenue test,Timm's reportable segments were

An analysis of Abbey Company's operating segments provides the following information: -Refer to the above information.Which of the operating segments above are reportable segments?

An analysis of Abbey Company's operating segments provides the following information: -Refer to the above information.Which of the operating segments above meet the operating profit (loss) test?

Zeus Corporation has determined that it has 15 reportable operating segments.In order to comply with the standard for segment disclosures,Zeus Corporation should do which of the following?

Trimester Corporation's revenue for the year ended December 31,20X8,was as follows: Trimester has a reportable operating segment if that segment's revenue exceeds:

ASC 280 uses a(n) ______ approach to the definition of segments.

Five of eight internally reported operating segments of Rollins Company qualify under the standards set by ASC 280 for segment reporting.However,the five identified segments do not meet the 75 percent revenue test.ASC 280 prescribes that management:

In 20X6 and 20X7,each of Putney Company's four operating segments met one of the three quantitative tests for segment reporting.In 20X8,Segment B failed to qualify under the prescribed tests because of abnormal financial conditions.The other three segments qualified for reporting.For 20X8,Segment B:

Biometric Corporation's revenue for the year ended December 31,20X6,was as follows: Biometric has a reportable operating segment if that segment's revenue exceeds