Asked by Eleanna Koutsouveli on Jun 06, 2024
Verified
The following information was obtained from the Clovis Company:
Operating Segment Profit Segment Revenue Assets (Loss )A$640$520$88 B12412032C76068040D160240(8)E3264(4)F809616G48040016H120‾160‾(48‾)$2,396$2,280$132\begin{array}{lrrr}\text { Operating } & & \text { Segment } & \text { Profit } \\\text { Segment } & \text { Revenue } & \text { Assets } & \text { (Loss )} \\ \mathrm{A} & \$ 640 & \$ 520 & \$ 88 \\\mathrm{~B} & 124 & 120 & 32 \\\mathrm{C} & 760 & 680 & 40 \\\mathrm{D} & 160 & 240 & (8) \\\mathrm{E} & 32 & 64 & (4) \\\mathrm{F} & 80 & 96 & 16 \\\mathrm{G} & 480 & 400 & 16 \\\mathrm{H} & \underline{120}& \underline{160} & \underline{(48})\\&\$2,396&\$2,280&\$132\end{array} Operating Segment A BCDEFGH Revenue $6401247601603280480120$2,396 Segment Assets $5201206802406496400160$2,280 Profit (Loss )$883240(8)(4)1616(48)$132
Required:
a. Using the revenue test, which segments should be separately reported?
b. Using the asset test, which segments shou'd be separately reported?
c. Using the profit (loss) test, which segments should be separately reported?
Revenue Test
A criterion used to determine when revenue is recognized in the accounting records, based on the completion of a revenue-generating process or event.
Asset Test
A measure used to evaluate a company's ability to meet its short-term liabilities with its most liquid assets.
Profit (Loss) Test
A financial assessment to evaluate the profitability or loss of a business operation or investment.
- Acquire knowledge of and execute the universally recognized accounting standards (GAAP) when reporting by segment.
Verified Answer
b. A,C,D \mathrm{A}, \mathrm{C}, \mathrm{D} A,C,D , and G(Test=0.10‘$2,280=$228 \mathrm{G}(\mathrm{Test}=0.10 ` \$ 2,280=\$ 228 G(Test=0.10‘$2,280=$228 ; any segment with assets >$228 >\$ 228 >$228 )
c. A,B,C \mathrm{A}, \mathrm{B}, \mathrm{C} A,B,C , and H \mathrm{H} H Test =0.10′($16+$16+$88+$32+$40)=$19.2 =0.10^{\prime}(\$ 16+\$ 16+\$ 88+\$ 32+\$ 40)=\$ 19.2 =0.10′($16+$16+$88+$32+$40)=$19.2 ; any segment with absolute amount of profit or loss >$19.2] \left.>\$ 19.2\right] >$19.2]
Learning Objectives
- Acquire knowledge of and execute the universally recognized accounting standards (GAAP) when reporting by segment.
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