Question 1

_____ The assets test used for determining reportable segments uses an asset amount that includes:

Accepted Answer

The answer of _____ The assets test used for determining...

Question 2

_____ The assets test used for determining reportable segments uses an asset
amount that excludes:

Accepted Answer

The answer of _____ The assets test used for determining...

Question 3

_____ To qualify as a reportable segment (disregard the requirements of the 75% test), the segment must satisfy

Accepted Answer

A segment qualifies as a reportable segment if it satisfies one of the three 10% tests, according to accounting standards for segment reporting.

Question 4

_____ The 75% test is based on

Accepted Answer

The answer of _____ The 75% test is based on
...

Question 5

_____ Which of the following disclosed segment items need not be reconciled to the corresponding consolidated amount even though the item is included in the measure of profitability used by the CODM to manage the segment?

Accepted Answer

Under IFRS 8 Operating Segments, all significant segment items reported to the Chief Operating Decision Maker (CODM) must be reconciled to consolidated amounts, except for items that cannot be allocated on a reasonable basis. However, the options provided (interest expense, extraordinary items, depreciation expense, goodwill amortization expense) are typically allocable and reconcilable to consolidated amounts. The question specifies items that are included in the measure of profitability used by the CODM, implying they are already considered in segment reporting and thus should be reconcilable. Therefore, none of the options provided are exceptions to the reconciliation requirement.

Question 6

_____ Which of the following mandatory or voluntarily disclosed segment items need not be reconciled to the corresponding consolidated amount?

Accepted Answer

Under both IFRS and US GAAP, all segment items that are reported must be reconcilable to the entity's consolidated amounts, except for extraordinary items, as these are not recognized in the financial statements following the removal of the concept from both IFRS and US GAAP. However, since the question implies a need for reconciliation except for one, and extraordinary items are no longer recognized, all listed items would typically need to be reconciled, making E the correct choice by default.

Question 7

For segment reporting purposes, the components of a vertically integrated business

Accepted Answer

For segment reporting purposes, the components of a vertically integrated business may be reported separately if they meet certain criteria set forth by accounting standards such as IFRS 8 or ASC 280 under US GAAP. These criteria typically include considerations such as whether the components represent distinct business activities or geographical areas, whether the results are regularly reviewed by the entity's chief operating decision maker, and whether discrete financial information is available for the components. If the components do not meet the criteria for separate reporting, they may be aggregated with other parts of the business. Therefore, the decision to report segments separately depends on the specific circumstances of the business and its internal reporting structure.

Question 8

_____ Aggregation of operating segments is allowed

Accepted Answer

Aggregation of operating segments is allowed for both reportable and nonreportable segments if they exhibit similar economic characteristics and meet the aggregation criteria.

Question 9

_____ Aggregation of two or more operating segments (not two or more reportable operating segments) having (1) similar economic characteristics and (2) a majority-not all-of other FAS 131 specified similarities is

Accepted Answer

The answer of _____ Aggregation of two or more operating...

Question 10

_____ Aggregation of two or more reportable operating segments (not two or more operating segments) having (1) similar economic characteristics and (2) a majority-not all-of other FAS 131 specified similarities is

Accepted Answer

Under FAS 131, which is the Financial Accounting Standards Board (FASB) standard on reporting about segments of an enterprise and related information, aggregation of two or more reportable operating segments is optional if they have similar economic characteristics and a majority, but not all, of the other similarities specified by the standard. This allows a company to present a clearer picture of its operations by combining segments that are alike in many ways, but not necessarily identical, into a single reportable segment. This can simplify financial reporting and make it easier for users of financial statements to understand the company's performance and prospects. However, the standard requires that certain criteria be met for segments to be aggregated in this way.

Question 11

_____ For segment reporting purposes, aggregation of operating segments (for which no determination has been made as to whether they are reportable segments) is allowed only if they satisfy

Accepted Answer

The answer of _____ For segment reporting purposes, aggregation of...

Question 12

_____ Which of the following items is not required to be disclosed under FAS 131?

Accepted Answer

Export sales are not specifically required to be disclosed under FAS 131, which focuses on segment reporting, including information about major customers, geographic areas, and types of products and services.

Question 13

_____ An entity that operates in several industries has (a) external sales of $40,000,000, (b) intrasegment sales of $3,000,000, and (c) intersegment sales of $7,000,000. In performing the 10% of revenues test to determine reportable segments, the 10% is applied to

Accepted Answer

The 10% revenue test for determining reportable segments is applied to the total revenue, which includes external sales and intersegment sales. Therefore, the total revenue is $40,000,000 (external) + $7,000,000 (intersegment) = $47,000,000.

Question 14

_____ An entity that operates in several industries has (a) external sales of $40,000,000, (b) intrasegment sales of $3,000,000, and (c) intersegment sales of $7,000,000. In performing the 75% test, the 75% is applied to

Accepted Answer

The 75% test is applied to external sales, which in this case amount to $40,000,000. This figure represents the entity's sales to external customers, which is the relevant measure for determining reportable segments under accounting standards.

Question 15

_____ An entity that operates in several industries has (a) external sales of $50,000,000, (b) intrasegment sales of $5,000,000, and (c) intersegment sales of $4,000,000. In performing the 10% of revenues test to determine reportable segments, the 10% is applied to

Accepted Answer

The 10% of revenues test is applied to the combined external sales and intersegment sales.

Question 16

_____ An entity that operates in several industries has (a) external sales of $50,000,000, (b) intrasegment sales of $5,000,000, and (c) intersegment sales of $4,000,000. In performing the 75% test, the 75% is applied to

Accepted Answer

The 75% test is applied to external sales, which in this case amount to $50,000,000. This figure is used to determine if a segment's revenue is significant enough to require separate disclosure in financial statements.

Question 17

_____ An entity has four operating segments. For 2006, their measures of profitability are $300,000, $200,000, $(100,000), and $(50,000). In applying the 10% profitability test to determine reportable segments, the 10% is applied to:

Accepted Answer

The 10% profitability test is applied to the total of the absolute values of the profits and losses of all segments, which is $300,000 + $200,000 + $100,000 + $50,000 = $650,000.

Question 18

_____ An entity has four operating segments. For 2006, their measures of profitability are $100,000, $200,000, and $(550,000), and $(5,000). In applying the 10% profitability test to determine reportable segments, the 10% is applied to:

Accepted Answer

The answer of _____ An entity has four operating segments....

Question 19

_____ Punex has three operating segments and a headquarters office. Information for the assets of these units at 12/31/06 follows:
 In applying the 10% of assets test used to determine reportable segments, the 10% is applied to

Accepted Answer

The answer of _____ Punex has three operating segments and...

Question 20

_____ Pinex has three operating segments and a headquarters office. Information for the assets of these units at 12/31/06 follows:
 In applying the 10% of assets test used to determine reportable segments, the 10% is applied to

Accepted Answer

The answer of _____ Pinex has three operating segments and...

Quiz 12: Reporting Segment and Related Information