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Question 2 Splish Inc. is involved in five separate industries. The following information is available for...

Question 2

Splish Inc. is involved in five separate industries. The following information is available for each of the five industry segments.

Operating Segment

Total Revenue

Operating Profit (Loss)

Identifiable Assets

A

$139,140

$24,980

$239,930

B

40,020

8,040

11,090

C

25,910

(5,010

)

35,910

D

189,620

(2,020

)

58,750

E

2,020

480

14,970

$396,710

$26,470

$360,650

(a) Determine which of the operating segments are reportable based on the revenue test.

(b) Determine which of the operating segments are reportable based on the operating profit (loss) test.

(c) Determine which of the operating segments are reportable based on the identifiable assets test.
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Homework Answers

Answer #1

Ans:

Reportable segments

(a)

Revenue Test

A,B,D

(b)

Operating Profit (Loss) Test

A,B,C

(c)

Identifiable assets test

A,D

(a) Revenue Test = Total revenue = $396,710

Times 10% = $39671

Segment meeting this test = A,B,D

(b) Operating Profit Test =

Total of segments with profit = $24,980 + $8040 + $480= $33500

Times 10% = $3350

Segment meeting this test = A,B,C

Remember to use absolute amounts; so even though Y is a loss, it qualifies

(c) Identifiable assets test

Total identifiable assets = $360,650

Times 10% = $36,065

Segment meeting this test = A,D


Hope this helped ! Let me know in case of any queries.

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