Chap008.doc

Chapter 08 - Segment and Interim ReportingChapter 08 Segment and Interim Reporting Multiple Choice Questions 1. Generally accepted accounting principles require a U.S. corporation to disclose the following disaggregated information for each operating segment, except: A. Revenues from external customers. B. Discontinued operations. C. Cost of goods sold. D. Depreciation expense. E. Intersegment revenues. 2. Which tests must a company use to determine which operating segments require separate disclosure? A. Revenue test and asset test. B. Revenue test, profit or loss test, and asset test. C. Revenue test and profit or loss test. D. Profit or loss test and asset test. E. Revenue test, asset test, and liability test. 3. Coulanger Corp. identified four operating segments: A, B, C, and D. Segment A met the revenue test for identifying reportable segments while Segment C met the revenue test, profit or loss test, and asset test. Segment B and Segment D did not meet any of these tests. Which of these segments must be disclosed separately? A. Option A B. Option B C. Option C D. Option D E. Option E 8-1 Chapter 08 - Segment and Interim Reporting 4. Kaycee Corporation's revenues for the year ended December 31, 2010, were as follows: Consolidated Revenue per the Income Statement: $1,200,000 Upstream Intersegment Sales: $180,000 Downstream Intersegment Sales: $60,000 For purposes of the Revenue Test, what amount will be used as the benchmark for determining whether a segment is reportable? A. $24,000. B. $120,000. C. $138,000. D. $144,000. E. $0 Natarajan, Inc. had the following operating segments, with the indicated amounts of segment revenues and segment expenses: 5. According to the revenue test, which segments would require disaggregation? A. A, B, D, and E. B. A and B. C. B and C. D. A, B, and D. E. C, D, and E. 6. According to the profit or loss test, which segments would require disaggregation? A. A, B, D, and E. B. A, B, C, and E. C. A, B, and D. D. A and D. E. A only. 8-2 Chapter 08 - Segment and Interim Reporting 7. For purposes of the profit or loss test, segment C's operating profit or (loss) is A. $1,300,000. B. $700,000. C. $2,000,000. D. $200,000. E. $(200,000). 8. When totaling the revenues to use as the basis for the 75% rule, what is the 75% hurdle that must be exceeded by the revenues of the reportable segments? A. $1,670,000. B. $12,525,000. C. $15,487,500. D. $16,700,000. E. $20,650,000. 9. When defining a reportable segment, which of the following conditions would be sufficient to allow a company to combine two operating segments for purposes of testing? A. The products sold by each segment are produced in the same plant. B. Both segments have several customers in common. C. The segments may sell different products, but they have a similar production process. D. Both segments are required to adhere to U.S. Department of Labor regulations regarding immigration laws. E. Both segments are owned by the same parent company. The Fratilo Co. had three operating segments with the following information: In addition, revenues generated at corporate headquarters are $1,400. 8-3 $28. $63. $57.940. $26. $2.640. B.000. C. $64. $29. $2. $2. E. C.800. 11. E. $52. D.200. $25. C. D.520.960. The Rivers Co.300. B.560.600. $78.730. 12. E.Chapter 08 . 8-4 .400. Combined segment revenues are calculated to be A. $2. D.680. had four separate operating segments: What amount of revenues must be generated from one customer before that party must be identified as a major customer? A.960. $2. B.Segment and Interim Reporting 10. What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable? A. $27.660. had six different operating segments reporting the following operating profit and loss figures: Which one of the following statements is true? A. I and III only C. Kurves Corp. II.) Revenue from external customers. Segment B is not a reportable segment based on this test. D. C. 14. B. A. and III B. Segment E is a reportable segment based on this test. Segment D is a reportable segment based on this test. Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements? (I.Segment and Interim Reporting 13. II and III only D. 8-5 . I and II only E.Chapter 08 . There is no requirement of information to disclose for operating segments.) Revenues from foreign customers. Segment C is not a reportable segment based on this test. E. identified by country. I.) Total Segment Assets (III. Segment A is a reportable segment based on this test. (II. $4.000. 16.000. B.000. D. B. What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable? A. $4.067.Chapter 08 . $5. What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable? A.658. $854. C. C.684.343. $897.585. E.737. $812.263. $4. 8-6 .368. E. D. $4.Segment and Interim Reporting Retro Corp. was engaged solely in manufacturing operations.632.705. The following data pertain to the operating segments for 2011: 15. $769.316.826. $833. 624.408. An operating segment is a component of an enterprise that engages in business activities from which it only earns revenues.936. What is the minimum amount of assets that each of these segments must own to be considered separately reportable? A. D. $9. $10. (II. B. None of the above. Which of the following statements is true regarding the determination of operating segments in order to decide which segments will be separately reported? A. I and III only. C.000. E. (III. and III. D. the nature of the business activities must be considered.Segment and Interim Reporting 17. $10. Which of the following statement(s) is correct? (I. II and III only. C. II. C. B.Chapter 08 .000. I. E.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance.450. 19. 8-7 . $8.) If more than one set of organizational units exists.413.000. An organizational unit can be an operating segment if all of its revenues or expenses result from transactions with other segments. D. B.272. The operating results of an operating segment are reviewed regularly by the corporate controller to assess performance. I and II only. each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible. E. There is integral financial information available for each operating segment.643. A.) If segment managers exist for two or more overlapping sets of organizational units. $12. All parts of a company must be included in some operating segment. 18. A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. additional segments must be disclosed separately despite their failure to satisfy even one of the three quantitative thresholds. C. C. At least 75 percent of total company sales made to outsiders should be presented. The type or class of customer. E. what amount will be used as total revenues of the hardware operating segment? A. $480. The nature of the production process. Which of the following statements is false concerning the number of operating segments that should be disclosed? A. B.000. if applicable. C. B. $417. The distribution methods. D. it must meet at least one of the three reporting tests to report separately in the current year.000. $460. 21. Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar? A. If the 75 percent rule is not met by the results of applying all three reporting tests. $424. D. 2011: For purposes of the revenue test. 8-8 . The practical limit to the number of operating segments is 10. E. The nature of the regulatory environment. If an operating segment qualifies for disclosure in the current year.000. prior period segment data presented for comparative purposes must be restated to reflect the newly reportable segment as a separate segment. The geographical location of the operations. 22. E. B.Segment and Interim Reporting 20. Even though an operating segment has been reportable in the past and is of continuing significance.000. The hardware operating segment of Bloom Corporation has the following revenues for the year ended December 31. D.Chapter 08 .000. $440. Lawn Equipment. Lawn Equipment met only the asset test. D. Whitley Corporation identified four operating segments: Automotive. D. B. 8-9 . B. Revenues from external customers. Products and services from which each segment derives its revenues. and amortization expense. Option C D. Which one of the following items is not required to be disclosed for each operating segment? A. Option A B. E. and Sporting Goods. Interest revenue and interest expense. Sporting Goods did not meet any of the three tests. Depreciation.Chapter 08 . C.Segment and Interim Reporting 23. Electrical met all three tests. Factors used to allocate company-wide pension expense. The following items are required to be disclosed for each operating segment except: A. Revenues from external customers. Revenues from transactions with other operating segments. depletion. Automotive met the revenue test and the profit or loss test. Option E 24. 25. Factors used to allocate company-wide expenses. Electrical. Revenues from transactions with other operating segments. E. Option B C. Factors used to identify operating segments. Which of these segments must be disclosed separately? A. Option D E. C. E. Rakes and Pails. 8-10 . What is the total amount of revenues in applying the revenue test? A. Inc. Hardware. Intersegment loans are receivables): 26. Rakes and Hardware. 27. D. E. C. and Accessories.Segment and Interim Reporting Dean Hardware. $892. Rakes. and Hardware. Pails and Hardware. is comprised of five operating segments. $934. Information about each of these segments is as follows (in thousands. D. C. $808. Which operating segments are reportable under the revenue test? A. B. B.Chapter 08 . Pails. $906. $794. Rakes. C. Rakes.8. C. E.2. B. what is the minimum amount an operating segment must have in order to meet the asset test for a reportable segment? A. $9. Pails. Rakes. Pails. D.Chapter 08 . and Shovels. 30. None.0 C. $15. Rakes. D. Rakes. $10.0. 29. E. and Shovels. $18. D. B. Pails. B. $8. In applying the profit or loss test.0. $12.4. Which operating segments are reportable under the profit or loss test? A.2. and Hardware. Rakes.4. Rakes. E. and Accessories. and Hardware.Segment and Interim Reporting 28. $19. and Hardware. $82. what is the minimum amount an operating segment must have in order to meet the profit or loss test for a reportable segment? A. Pails. E.5. Shovels. Hardware. In applying the asset test. Rakes. C. 31. 8-11 . $17. Pails. D. and Hardware. Pails. Pails. $13. B.2. Pails and Hardware. Shovels. Which operating segments are reportable under the asset test? A. Chapter 08 - Segment and Interim Reporting Schilling, Inc. has three operating segments with the following information: 32. What is the minimum amount of revenue an operating segment must have to be considered a reportable segment? A. $12,000. B. $15,000. C. $15,500. D. $16,200. E. $16,700. 33. According to the revenues test, which segment(s) are separately reportable? A. Silver only. B. Crystal and Silver. C. China and Crystal. D. China and Silver. E. China, Crystal, and Silver. Peterson Corporation has three operating segments with the following information: 8-12 Chapter 08 - Segment and Interim Reporting 34. What is the minimum amount of revenue an operating segment must have to be considered a reportable segment? A. $3,900. B. $4,000. C. $4,100. D. $4,200. E. $4,400. 35. According to the revenues test, which segment(s) are separately reportable? A. Mowers only. B. Mowers and Edgers. C. Mowers and Weedeaters. D. Edgers and Weedeaters. E. Mowers, Edgers, and Weedeaters. 36. What amount of revenues must be generated from one customer before that party must be identified as a major customer? A. $3,900. B. $4,000. C. $4,100. D. $4,200. E. $4,400. Elektronix, Inc. has three operating segments with the following information: 8-13 Chapter 08 - Segment and Interim Reporting 37. What is the minimum amount of revenue an operating segment must have to be considered a reportable segment? A. $650,000. B. $660,000. C. $670,000. D. $680,000. E. $690,000. 38. What is the operating profit or loss for the VCRs segment? A. $121,000 profit. B. $121,000 loss. C. $124,000 profit. D. $124,000 loss. E. $500,000 profit. 39. What is the minimum amount of operating profit or loss an operating segment must have to be considered a reportable segment? A. $124,000. B. $127,600. C. $100,000. D. $130,000. E. $140,000. 40. What is the minimum amount of assets an operating segment must have to be considered a reportable segment? A. $1,400,000. B. $2,500,000. C. $4,100,000. D. $5,000,000. E. $25,000,000. 8-14 8-15 . C. DVDs and MP3s. 44. VCRs and MP3s. E. Which operating segments are separately reportable under the revenues test? A. DVDs and VCRs. VCRs. VCRs. DVDs. DVDs and VCRs. C. and MP3s. DVDs. DVDs only. DVDs and MP3s. Which operating segments are separately reportable under the operating profit or loss test? A. B. DVDs and VCRs. Which operating segments are separately reportable under the assets test? A. DVDs only. DVDs. VCRs and MP3s. VCRs. C. B. and MP3s. D. Which of the segments are separately reportable? A. D. E. and MP3s. VCRs. C. B. VCRs and MP3s. VCRs and MP3s. D. and MP3s.Segment and Interim Reporting 41.Chapter 08 . DVDs and MP3s. D. E. 43. DVDs. B. E. DVDs and VCRs. DVDs only. DVDs and MP3s. DVDs only. 42. Chapter 08 . Interest income. B. Which of the following items does Vapor not have to report for this segment? A. E. Depreciation expense. A company comprised of only one operating segment does not have to report geographic area information. B. Geographic area information must be disclosed in interim financial statements. C. Amortization expense. Which of the following statements is true according to U. E. Intersegment sales. GAAP regarding segment or enterprise-wide disclosure? A. D.S. C. 47. 46. An operating segment's assets are 10 percent or more of corporate assets. D. B. B. 8-16 . E. C.S. Research and development expense. Disclosure of a major customer's identity is required. D. An operating segment's assets are 10 percent or more of combined segment liabilities.Segment and Interim Reporting 45. Interest expense. Which of the following is a criterion for determining whether an operating segment is separately reportable? A. Interest expense. An operating segment's assets are 10 percent or more of consolidated liabilities. An operating segment's assets are 10 percent or more of combined segment assets. A reconciliation of segment assets to consolidated assets is required. Which of the following operating segment disclosures is not required by U. Extraordinary items. E. C. 48. Segment information does not have to be in accordance with generally accepted accounting principles. An operating segment's assets are 10 percent or more of consolidated assets. Discontinued operations. Vapor Corporation has a fan products operating segment. GAAP? A. D. Liabilities. Discrete financial information generated by the internal accounting system is available. An organizational unit can not be an operating segment if all of its operating transactions are only with other segments of the organization. 52. three tests are applied and only one must be met. GAAP? A. Revenues from external customers. B. E. E. In determining reportable segments. three tests are applied and all three must be met. In determining reportable segments.S. In determining reportable segments. In determining reportable segments. B. 8-17 . 50. North America. Which of the following statements is true? A. Spain. Europe. Asia.S. C. Revenues from internal customers. Germany. Germany.S.S. Operating profit or loss. The segment is regularly reviewed by a chief decision maker to assess performance decisions. C. D. company for presentation of information by geographic area? A. C. United States. E. All Other Countries. Which of the following must be disclosed by a geographic segment according to U. E. GAAP? A. C. GAAP. D. The segment earns revenues and incurs expenses. Total assets. which of the following would be an acceptable grouping by a U. Africa. Which of the following is not true for an operating segment according to U. at least 80% of the revenues from external customers must be reported. Europe. Gross profit. two tests are applied and only one must be met. United States. According to U. B. 51. B. In determining reportable segments. United States.Segment and Interim Reporting 49. Mexico. D. two tests are applied and both must be met. The segment is regularly reviewed by a chief decision maker to make resource allocations. D. Canada. Canada. France. All Other Countries.Chapter 08 . Asia. E. B. 56. Central America. LIFO liquidations not expected to be replaced by the end of the year are reflected in cost of goods sold at original LIFO cost. LIFO liquidations expected to be replaced by the end of the year are accounted for in cost of goods sold at expected replacement cost rather than original LIFO cost. 55. Germany. The operating segment reporting sales to the customer. Taiwan. E. B. Which of the following would be an acceptable grouping for a U. D. C. South America. On a seasonal basis. On the cash basis. D. The geographic area of the customer. United States.S. Mexico. C. 8-18 . United States. United States. company to provide information by geographic area? A. E. In the same way as they are recognized on an annual basis. 54. B. What information does U. Spain. D. The length of time the customer has been a customer of the company. Germany.Segment and Interim Reporting 53. On an annualized basis. C.S. C.Chapter 08 . FIFO is remeasured using the LIFO method in an interim financial statement. D. The identity of the customer. All Other Countries. Europe. GAAP require to be disclosed for a major customer? A. E. Which of the following is not correct regarding inventory procedures reported in an interim financial statement? A. The percentage of sales derived from the customer. All Other Countries. Lower-of-cost-or-market adjustments are not made for the interim period if they are expected to reverse by the end of the year. There are no revenues recognized in interim periods. B. How should revenues be recognized in interim periods? A. United States. Variances in a standard costing system are reported at the end of the interim period unless they are expected to be absorbed by year-end. During the first quarter. $83.000 C.000 B. 57. $221.000 units of inventory costing $25 per unit. During the second quarter. and sales of 3.Chapter 08 . $250.000 D. Option B C.400 units at $65 per units were made.000 8-19 .000 units were purchased at a cost of $40 per unit. The amount of gross profit for the first quarter is: A. the company expects to replace the units of beginning inventory sold at a cost of $45 per unit. Option C D. 3. Cement Company uses the LIFO method to account for inventory. began the first quarter with 1.Segment and Interim Reporting Cement Company. Option D E. $90. Inc. Option E 58.000 E. What is the correct journal entry to record cost of goods sold at the end of the first quarter? A. Option A B. $87. B. Gains on sales of major equipment. C. Record one-fourth of the loss in the first quarter as an extraordinary loss. How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement? A. Postpone recording of the change to the annual income statement. E. and record it in the annual statement only. 60. net of income taxes. but is material in amount relative to the first quarter. D. D. Sales or gross revenues. Ignore the loss. net of income taxes. C. B. Earnings per share. Adjust financial statements for each prior period presented to reflect the effects of the new principle in those reported periods. B.Chapter 08 . net of income taxes. Disposal of a segment. Significant changes in estimates or provisions for income taxes. E. C. 62. Record the change in the third-quarter income statement. Retrospectively restate the first-quarter income statement. Ignore the loss in the first quarter. The proper accounting treatment in the first quarter interim statement is to: A. net of income taxes. E. Which of the following is not a required disclosure in an interim financial report? A. incurred a flood loss during the first quarter of 2011 that is deemed both unusual and infrequent. Gross profit. as though the change occurred at the beginning of the year. B. Record the loss in the first quarter. Record the loss in the first quarter as an extraordinary loss.Segment and Interim Reporting 59. Betsy Kirkland. Earnings per share. C. Net income. Provision for income taxes. Which of the following is not a required disclosure in an interim financial report? A. Extraordinary items. D. Inc. 8-20 . and disclose the loss in a separate note or in the income statement as a separate line item. The loss is considered immaterial to the twelve-month period. but not as an extraordinary loss. 61. D. E. These changes are prohibited by GAAP. net of income taxes. 65. E. Metric and integral. C. Extraordinary gains. Discrete and integral. II. 66. Recognized at year-end only. I. I. Change in accounting principle.) Revenues from external customers (II. Discrete and metric. Ignored. E. B. Recognized in the third quarter. Indiscrete and terminal. B. C. II and III. 8-21 . I and III only. III. Discrete and terminal. Which of the following items of information are required to be included in interim reports for each operating segment? (I. C. E.) Segment profit or loss (III. E. Recognized ratably over the first three quarters. What are the two approaches that can be followed in preparing interim reports? A. D.) Intersegment revenues A.Segment and Interim Reporting 63. D. D. B. Income tax expense. Recognized in the first quarter. and IV. B. Property tax expense. C. II and III only.Chapter 08 . Which of the following is reported for interim financial reports using the discrete approach? A. 64. How are extraordinary gains reported in a third quarter interim financial report? A. D. I and II only.) Reconciliation of segment profit or loss to the enterprise's total income before taxes (IV. Seasonal items. Chapter 08 . D. The financial statements should be adjusted to reflect the assumption that no seasonal revenues could be earned. Total assets. The seasonal nature should be disclosed. Change in accounting principle. 68. E. Gross revenues.Segment and Interim Reporting 67. D. B. B. Segment profit or loss. Extraordinary gains. 70. D. 69. C. Change in cash. Total current liabilities. E. The seasonal nature should be disclosed but no other reports should accompany the interim report. Reconciliation of segment profit or loss to total income before taxes. C. Bonus expense. C. D. B. Intersegment revenues. E. How should seasonal revenues be reported in an interim financial statement? A. Extraordinary losses. The seasonal nature should be disclosed. All of the following are required to be reported in interim financial statements for a material operating segment except: A. Which of the following are required to be disclosed in interim reports? A. E. Cash flows from investing activities. Which of the following is reported for interim financial reports using the integral approach? A. Cash basis accounting. and a pro forma report for the next 12-month period should supplement the interim report. Segment assets. Seasonal revenues have no particular reporting requirement. and a supplemental report for the 12-month period ended at the interim date should supplement the interim report. C. 8-22 . Segment revenues from external customers. B. B. The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim income statement but not the interim balance sheet. The loss should be recorded in the interim period in which market value drops below cost if the loss is considered permanent. C. There is no loss to report.Segment and Interim Reporting 71. D. The loss should be recorded in the interim period in which cost drops below market value if the loss is considered permanent. E. E. B. D. The loss should be ignored for interim reporting purposes. The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim balance sheet and the interim income statement. The loss should be recorded in the interim period in which market value drops below cost if the loss is considered temporary. C. E. 72. What is the appropriate treatment in an interim financial report for a LIFO liquidation? A. There is no loss to report. B. What is the appropriate treatment in an interim financial report for inventory that has cost below market value? A. The LIFO liquidation is always ignored for interim reporting. The loss should always be recorded in the interim period in which cost drops below market value.Chapter 08 . The loss should always be recorded in the interim period in which market value drops below cost. C. The loss should be ignored for interim reporting purposes. What is the appropriate treatment in an interim financial report for inventory that has market value below cost? A. 8-23 . 73. D. The loss should be recorded in the interim period in which cost drops below market value if the loss is considered temporary. The LIFO liquidation should always be reflected in gross profit on an interim income statement. The LIFO liquidation should only be reflected in gross profit on an interim income statement if it is determined that it will not be replaced by year-end. What is the appropriate treatment in an interim financial report for variances arising from the use of a standard costing system? A. Projected losses on long-term contracts should be deferred to the annual report. and 4 D. E.Chapter 08 .Segment and Interim Reporting 74. and 4 8-24 . The variances are always ignored for interim reporting. and 3 C. B. 76. Revenues should be recognized on the income tax basis for interim reporting. 1 and 2 B. E. 2. 3) Bonus expense. C. 3. 4) Quantity discounts based on annual sales. The variances should only be reflected in the interim balance sheet. D. The variances should always be reflected in the interim income statement but not the interim balance sheet. 75. 1. D. 1. if estimable. 2. A. 3. Revenues should be recognized on the cash basis of accounting for interim reporting. C. The variances expected to be absorbed by year-end should not be reflected in the interim statement. The variances should always be reflected in gross profit on an interim income statement. 2. B. and 4 E. The percentage-of-completion method of reporting long-term construction projects is not an acceptable method for interim reporting. 2. 1. 2) Advertising expense. Which of the following costs require similar treatment to Property Tax Expense in an interim financial report? 1) Annual major repairs. Which of the following statements is true regarding the reporting of revenues in an interim report? A. Revenues should be recognized in interim periods in the same way as they are on an annual basis. At the end of the second quarter of 2011. D. How much income tax expense is recognized in the second quarter of 2011? A.250.000. Recorded as gains or losses as incurred. C.000. Pretax income for the first quarter was $300. D. 78. $208.000. Disclosed the same way as they are disclosed in annual reports. B. 79. $105. C. 8-25 . C. $96. B.500.Chapter 08 .Segment and Interim Reporting 77. D. Assume no items in either quarter requiring the net-of-tax presentation. How should contingencies be reported in an interim report? A.000. Recorded as gains or losses only if material. B. E.000. Pretax income for the second quarter was $350. E.000. $26. Provo. $104.000. $112. Ignored.000.000. Provo expects the annual tax rate to be 32 percent because of anticipated tax credits. and ignored in all future periods. has an estimated annual tax rate of 35 percent in the first quarter of 2011. How much income tax expense is recognized in the first quarter of 2011? A. $0. Disclosed in the interim period discovered. Inc. $103. E. $112. $122. $527.000. Baker has an effective income tax rate of 30 percent and 100. $5. B.05. E.00. C.95. $500. D.000.950.92. $492. $5.200. Assuming Baker makes the change in the first quarter of 2011. B. The following additional information is available: 80. 81. E. 8-26 . Assuming Baker makes the change in the first quarter of 2011.000 shares of common stock issued and outstanding. compute net income per common share.Chapter 08 . C.800.28. $5.Segment and Interim Reporting Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. how much is reported as net income for the first quarter of 2011? A. $505. D. $494. A. $4. $4. E.200. D. special accounting items should be disclosed in the annual financial statements. $335. C. $322.850. 84. The SEC requires selected quarterly financial data to be reported separately as a fourthquarter report.000. B. how much is reported as net income for the first quarter of 2010? A. $265. 83. A condensed statement of cash flows.750. $894. $427. D.000 net income is earned during the second quarter. $400. 85. how is the fourth quarter reported? A. A condensed statement of stockholders' equity. D. E. C. E. B. According to International Financial Reporting Standards (IFRS). C. B.Segment and Interim Reporting 82.000. D. 8-27 . C. A condensed statement of financial position. A condensed statement of net income and comprehensive income. $405. B.250. how much is reported as net income for the second quarter of 2011? A.200.950. Assuming Baker makes the change in the first quarter of 2011. E. $277.000. Every company that reports for the first three quarters must also publish a fourth-quarter report. $905.Chapter 08 . Assuming Baker makes the change in the first quarter of 2011 and that $400. Accrual of income tax expense at the end of each interim period. When fourth-quarter financial statements are provided. For companies that provide quarterly reports. No fourth-quarter report is required. No company may publish a fourth-quarter report.000. $300. all of the following are part of minimum components of interim financial reporting except: A. Chapter 08 - Segment and Interim Reporting 86. Which of the following is false with regard to accounting standards for segment reporting according to International Financial Reporting Standards (IFRS) and U.S. GAAP? A. IFRS and U.S. GAAP do not each require disclosure of segment liabilities. B. IFRS and U.S. GAAP both require disclosure of intangible assets attributable to geographic segments. C. According to IFRS, operating segments can be based on products and services. D. According to IFRS, operating segments can be based on geographic areas. E. IFRS and U.S. GAAP both require disclosure of total assets. Essay Questions 87. What is the major objective of segment reporting? 88. What is meant by the term, disaggregated financial information? 89. Why are quarterly financial statements required to be published for publicly traded companies in the U.S.? 8-28 Chapter 08 - Segment and Interim Reporting 90. How does a company measure income tax expense to be reported in an interim period? 91. What two disclosure guidelines for operating segment information are designed to ensure the consistency of data reported from year to year? 92. Describe the test to determine whether a sufficient number of operating segments are disclosed. 93. What approach is used, according to U.S. GAAP, for determination of how a business is divided into segments? 8-29 Chapter 08 - Segment and Interim Reporting 94. According to U.S. GAAP, what general information about an operating segment needs to be disclosed? 95. According to U.S. GAAP, how should common costs be allocated to individual segments to determine segment profit or loss? 96. List the five aggregation criteria that need to be considered by management in determining whether business activities and environments are similar. 97. What is the purpose of the U.S. GAAP seventy-five percent requirement for industry segment disclosure? 8-30 Which items of information are required to be included in interim reports for each operating segment? 101.S.Chapter 08 . and (3) each foreign country in which a material amount of revenues is earned? 8-31 . what revenues and expenses included in segment profit or loss need to be disclosed? 99. What related items need to be disclosed in regard to total segment assets? 100. GAAP. According to U. Which two items of information must be reported for (1) the domestic country. (2) all foreign countries in which the enterprise derives revenues or holds assets.Segment and Interim Reporting 98. Chapter 08 .Segment and Interim Reporting 102. (3) lumber. The following segment information was generated by the internal reporting system in 2011: Required: 1) What was the profit or loss of each of these segments? 2) Prepare the profit or loss test to determine which of these segments was separately reportable. and (5) finance. 8-32 . (2) metals. Faru Co. Burnside Corp. is organized into four operating segments. (4) paper. identified five industry segments: (1) plastics. Information describing each segment is presented below (in thousands). Each of these segments had been consolidated appropriately by the company in producing its annual financial statements. Prepare the asset test and determine which of these segments was separately reportable. 8-33 . 105. Prepare the profit or loss test and determine which of these segments was separately reportable.Segment and Interim Reporting 103. Prepare the revenue test and determine which of these segments was separately reportable.Chapter 08 . 104. 000 for the calendar year 2011. On February 23.) Which operating segments are reportable? (h. Cleveland. Information about each of these segments is as follows (in thousands): Required: (a. what is the minimum amount an operating segment must have in order to meet the asset test for a reportable segment? (g.) What is the total amount of revenues in applying the revenues test? (c. paid property taxes of $300.) In applying the profit or loss test. what is the minimum amount an operating segment must have in order to meet the profit or loss test for a reportable segment? (e. Inc. Blanton Corporation is comprised of five operating segments.Chapter 08 .) In applying the asset test..) Which operating segments are reportable under the profit or loss test? (d.) Which operating segments are reportable under the revenue test? (b. 2011.Segment and Interim Reporting 106.) According to the test results for reportable segments. 8-34 .) Which operating segments are reportable under the asset test? (f. is there a sufficient number of reported segments or should any additional segments also be disclosed? Explain the reason for your conclusion. Inc. 109. 2011? 8-35 .Segment and Interim Reporting 107. Assuming Gregor does not expect to replace the units of beginning inventory sold.Chapter 08 . During the first quarter of 2011. Gregor. Inventory for Gregor on January 1. and sales of 265 units at a retail price of $50 per unit were made.. uses the LIFO cost-flow assumption to value inventory. 2011? 108. 2011 was 100 units at a LIFO cost of $25 per unit. How much of this expense should be included in Cleveland's net income for the quarter ending March 31. 200 units were purchased costing an average of $40 per unit. 2011. Prepare the journal entry for the payment of property taxes on February 23. what is the amount of cost of goods sold for the quarter ended March 31. what is the amount of cost of goods sold for the quarter ended March 31.Segment and Interim Reporting 110. 2011.000 shares of common stock outstanding at all times. On June 10. Inc. 8-36 . Harrison adopted the FIFO method of accounting for inventory. and applied the LIFO method for inventory valuation. Harrison's effective income tax rate is 40 percent. Compute the after-tax effect of Harrison's change in inventory method. 2010. 111.Chapter 08 . above. began operations on January 1. Assuming Gregor expects to replace the units of beginning inventory sold before the yearend at a cost of $41. Additional information is as follows: The LIFO method was applied during the first quarter of 2011 and the FIFO method was applied during the second quarter of 2011 in computing income. Harrison has 500. 2011? Harrison Company. 8-37 . 2011: Urbanski uses the LIFO method to account for inventory. Compute cost of goods sold and gross profit for the quarter ending June 30.Chapter 08 . Prepare a schedule showing the calculation of net income and earnings per share to be reported by Harrison for the three-month period and the six-month period ended June 30.000 units to be on hand in the ending inventory at year-end. The following information for Urbanski Corporation relates to the three months ending June 30. and expects at least 15. 113.Segment and Interim Reporting 112. 2011. 2010 and 2011. Purchases made in the last six months are expected to cost an average of $18 per unit. Refer To: 08-114 115.Segment and Interim Reporting 114. Prepare the journal entries to reflect the sales and cost of goods sold. Prepare the journal entries to reflect the sales and cost of goods sold.Chapter 08 . assuming Urbanski expects to maintain 11.000 units in inventory at year-end. assuming Urbanski does not expect to replace the liquidated inventory at year-end. Refer To: 08-114 8-38 . Required to be disclosed by a geographical segment. Required to be disclosed by an operating segment.Segment and Interim Reporting Matching Questions 116. Required to be disclosed by an Types of products and services operating segment. but not a Discontinued operations and geographical segment extraordinary items.Chapter 08 . when applicable. 4. Required to be disclosed by an operating segment. Required to be disclosed by both an operating segment and a geographical segment Long-lived assets. Required to be disclosed by both an operating segment and a geographical segment Income tax expense or benefit. 10. Not required to be disclosed by either an operating segment or a geographical segment Factors used to identify segments. but not a geographical segment Cash flow information ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 8-39 . 11. For each of the following situations. 7. 5. Required to be disclosed by an operating segment. but not a Revenues from external geographical segment customers. Not required to be disclosed by either an operating segment or a geographical segment Interest revenue. select the best answer concerning segment disclosures of reportable segments. but not a geographical segment Names of major customers. Required to be disclosed by an operating segment. Required to be disclosed by an operating segment. 6. but not a Revenues from transactions with geographical segment other segments. but not a from which each segment derives its geographical segment revenues. 9. 1. but not an Revenues for the domestic operating segment country. 8. 2. 3. Revenue test and asset test.Chapter 08 . asset test. B. E. C. Revenue test. Profit or loss test and asset test. D. and liability test. C. Revenue test and profit or loss test. profit or loss test. Generally accepted accounting principles require a U. except: A. Cost of goods sold. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-03 List the basic disclosure requirements for operating segments. Revenue test.Segment and Interim Reporting Chapter 08 Segment and Interim Reporting Answer Key Multiple Choice Questions 1. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Revenues from external customers. 8-40 . Intersegment revenues. 2.S. Which tests must a company use to determine which operating segments require separate disclosure? A. corporation to disclose the following disaggregated information for each operating segment. Depreciation expense. B. D. E. and asset test. Discontinued operations. $120. and asset test. D. 2010.000. 8-41 . Which of these segments must be disclosed separately? A. Option D E. identified four operating segments: A.Chapter 08 .000 Upstream Intersegment Sales: $180. were as follows: Consolidated Revenue per the Income Statement: $1. E. Coulanger Corp. $138. Segment A met the revenue test for identifying reportable segments while Segment C met the revenue test.000 For purposes of the Revenue Test.000. Option A B.000. Kaycee Corporation's revenues for the year ended December 31. B. and D. 4.Segment and Interim Reporting 3. $0 AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.000. Segment B and Segment D did not meet any of these tests. C. $24.200. Option E AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. what amount will be used as the benchmark for determining whether a segment is reportable? A. C. Option B C. profit or loss test. B.000 Downstream Intersegment Sales: $60. Option C D. $144. A and D. and E. C. A. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. E. B. D. B. Inc. B. According to the profit or loss test. 6. According to the revenue test. B and C. which segments would require disaggregation? A. and D. D. D. B. C. B. B. and E. which segments would require disaggregation? A. A only. D. A. and E. A.Chapter 08 . had the following operating segments. 8-42 . C. A and B. D. and D. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. C. and E. with the indicated amounts of segment revenues and segment expenses: 5. B. A. E. A.Segment and Interim Reporting Natarajan. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.000. E. $12.700.000. C. B.Chapter 08 . D.000.000. $16. 8-43 .650.000.525. $(200.000.500.000.670. $1.000. C. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. $2. B. segment C's operating profit or (loss) is A.487. When totaling the revenues to use as the basis for the 75% rule. $1.Segment and Interim Reporting 7. $15. $200.000. 8. For purposes of the profit or loss test. what is the 75% hurdle that must be exceeded by the revenues of the reportable segments? A. D. $20.000).300. E. $700. had three operating segments with the following information: In addition.400.300. $29. D. C. Combined segment revenues are calculated to be A. revenues generated at corporate headquarters are $1. E. When defining a reportable segment. Both segments have several customers in common. $27.600. Both segments are owned by the same parent company. but they have a similar production process. $26.Segment and Interim Reporting 9. E. The products sold by each segment are produced in the same plant. which of the following conditions would be sufficient to allow a company to combine two operating segments for purposes of testing? A. $28. The segments may sell different products. C. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. B. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.S. B.400. $25. 10. Both segments are required to adhere to U.200.000.Chapter 08 . D. The Fratilo Co. 8-44 . Department of Labor regulations regarding immigration laws. 730.560. $2. E.960. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.520. 12. $2.960.940. B. C. C. $64. had four separate operating segments: What amount of revenues must be generated from one customer before that party must be identified as a major customer? A. $63. B.680. What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable? A. 8-45 .660. $78.640. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. D. The Rivers Co. $57. E.800. D. $2.Segment and Interim Reporting 11. $52.Chapter 08 . $2. $2. Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements? (I. (II. Segment C is not a reportable segment based on this test.Chapter 08 . AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-03 List the basic disclosure requirements for operating segments. Segment A is a reportable segment based on this test. C. 14. B. II. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Segment E is a reportable segment based on this test. I and II only E. I and III only C. Segment B is not a reportable segment based on this test. E. II and III only D. 8-46 . D. Kurves Corp. had six different operating segments reporting the following operating profit and loss figures: Which one of the following statements is true? A. There is no requirement of information to disclose for operating segments.) Revenue from external customers. A. identified by country. I.Segment and Interim Reporting 13.) Revenues from foreign customers. and III B. Segment D is a reportable segment based on this test.) Total Segment Assets (III. $4.Chapter 08 .658.067. $4. What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable? A. $4. 8-47 .705.Segment and Interim Reporting Retro Corp. was engaged solely in manufacturing operations.585.826.632. The following data pertain to the operating segments for 2011: 15. B. D.343. $4. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.000. C.684.316. $5. E. $12.450. $8. $10. $10.Chapter 08 .408.368. $769.000. $812.000.263. $897. $854. D.000.936. $9.413. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.272. B.643. E. 17. B. D.624. What is the minimum amount of assets that each of these segments must own to be considered separately reportable? A. C.000. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. C. $833. 8-48 . What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable? A. E.000.737.Segment and Interim Reporting 16. the nature of the business activities must be considered. E. each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible. C.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance. I and II only. All parts of a company must be included in some operating segment.) If more than one set of organizational units exists.Chapter 08 . A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. 8-49 . AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-01 Understand how an enterprise determines its operating segments and the factors that influence this determination. B. An operating segment is a component of an enterprise that engages in business activities from which it only earns revenues. An organizational unit can be an operating segment if all of its revenues or expenses result from transactions with other segments. B. (III. 19. C. (II. E. II and III only. and III. Which of the following statements is true regarding the determination of operating segments in order to decide which segments will be separately reported? A.Segment and Interim Reporting 18. A. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Hard Learning Objective: 08-01 Understand how an enterprise determines its operating segments and the factors that influence this determination. D. I.) If segment managers exist for two or more overlapping sets of organizational units. D. None of the above. II. I and III only. Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. The operating results of an operating segment are reviewed regularly by the corporate controller to assess performance. Which of the following statement(s) is correct? (I. There is integral financial information available for each operating segment. C.000. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. C. The nature of the production process. what amount will be used as total revenues of the hardware operating segment? A. if applicable.000. 21. $480. 8-50 . The geographical location of the operations. D. $460. D. $440.000. $424. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. B.000. The nature of the regulatory environment.Segment and Interim Reporting 20. B. E. The hardware operating segment of Bloom Corporation has the following revenues for the year ended December 31. 2011: For purposes of the revenue test. Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar? A. E. $417. The type or class of customer.000.Chapter 08 . The distribution methods. additional segments must be disclosed separately despite their failure to satisfy even one of the three quantitative thresholds. Which of the following statements is false concerning the number of operating segments that should be disclosed? A. C. The practical limit to the number of operating segments is 10. At least 75 percent of total company sales made to outsiders should be presented. it must meet at least one of the three reporting tests to report separately in the current year.Segment and Interim Reporting 22. E. prior period segment data presented for comparative purposes must be restated to reflect the newly reportable segment as a separate segment.Chapter 08 . Even though an operating segment has been reportable in the past and is of continuing significance. 8-51 . If the 75 percent rule is not met by the results of applying all three reporting tests. D. B. If an operating segment qualifies for disclosure in the current year. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Option B C. Revenues from external customers. 8-52 . Electrical. Factors used to identify operating segments. Option D E. C. Which of these segments must be disclosed separately? A. Sporting Goods did not meet any of the three tests. B. Revenues from transactions with other operating segments. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-03 List the basic disclosure requirements for operating segments.Chapter 08 . Factors used to allocate company-wide expenses. Option E AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Lawn Equipment. E. Option C D. Whitley Corporation identified four operating segments: Automotive. Option A B. Lawn Equipment met only the asset test. Electrical met all three tests. Products and services from which each segment derives its revenues. Automotive met the revenue test and the profit or loss test. D. Which one of the following items is not required to be disclosed for each operating segment? A.Segment and Interim Reporting 23. and Sporting Goods. 24. C.Chapter 08 . Interest revenue and interest expense. Revenues from external customers. E. depletion.Segment and Interim Reporting 25. Depreciation. is comprised of five operating segments. Factors used to allocate company-wide pension expense. The following items are required to be disclosed for each operating segment except: A. Revenues from transactions with other operating segments. D. Inc. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-03 List the basic disclosure requirements for operating segments. and amortization expense. Dean Hardware. B. Intersegment loans are receivables): 8-53 . Information about each of these segments is as follows (in thousands. and Accessories. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. $13. Rakes and Pails. $8.Chapter 08 . Rakes. $808. Rakes and Hardware. What is the total amount of revenues in applying the revenue test? A.Segment and Interim Reporting 26. B. 27. 8-54 . C. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. E. $10. and Hardware. 28. Pails and Hardware. $906. In applying the profit or loss test. Which operating segments are reportable under the revenue test? A.0 C. D. what is the minimum amount an operating segment must have in order to meet the profit or loss test for a reportable segment? A.0. $9. $82. B. $892.4. B. C. $794.0. E.2. D. Pails. E. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. $934. Hardware. D. Rakes. 4. Pails. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Pails. and Hardware. D.Segment and Interim Reporting 29. Rakes. C.2. B. Shovels. what is the minimum amount an operating segment must have in order to meet the asset test for a reportable segment? A. $12. $18.8. E. Pails and Hardware. and Shovels. 30. Rakes. and Hardware. D. Rakes. Rakes. 31. C. and Accessories. Pails. Shovels. $17.5. Rakes. Which operating segments are reportable under the asset test? A. $15.2. Rakes. Hardware. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Which operating segments are reportable under the profit or loss test? A. B. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. 8-55 . Pails. E.Chapter 08 . In applying the asset test. and Shovels. Pails. Pails. None. C. and Hardware. $19. D. B. Pails. and Hardware. Rakes. E. $12. C. E. Crystal. $16. $16.700. B. Inc. E. According to the revenues test. B. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. China and Silver. 8-56 .200.000. and Silver. D. $15. China and Crystal. which segment(s) are separately reportable? A.Chapter 08 .000. China. What is the minimum amount of revenue an operating segment must have to be considered a reportable segment? A.Segment and Interim Reporting Schilling. Silver only.500. Crystal and Silver. D. has three operating segments with the following information: 32. $15. C. 33. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. 900. D. 35. B. $4. $4. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. which segment(s) are separately reportable? A. Mowers only. 8-57 . E. Edgers. Mowers. B. C. and Weedeaters.400. $4. C.000. $4. $3. According to the revenues test. Edgers and Weedeaters. E. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. D.Chapter 08 . What is the minimum amount of revenue an operating segment must have to be considered a reportable segment? A.100.Segment and Interim Reporting Peterson Corporation has three operating segments with the following information: 34. Mowers and Edgers. Mowers and Weedeaters.200. $670. $690.000. E. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. $4. D. C. Inc. $650. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. B.000.400. B. $680. Elektronix. $4. What amount of revenues must be generated from one customer before that party must be identified as a major customer? A. E. $660. C.200.000.Chapter 08 .000. $3. What is the minimum amount of revenue an operating segment must have to be considered a reportable segment? A. D.000.Segment and Interim Reporting 36. $4. $4.000. 8-58 .100.900. has three operating segments with the following information: 37. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. $124.Segment and Interim Reporting 38. $140.000. What is the operating profit or loss for the VCRs segment? A. 39. C. $124.000.000.600.500. D.400. $124. B.000. B. What is the minimum amount of operating profit or loss an operating segment must have to be considered a reportable segment? A. $121.100. C. E.000. $4. $1.000. D. $5. C.000 loss. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. 8-59 . 40. $127. D. $100. $121. $25.000 profit.Chapter 08 .000 profit. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. E.000 loss.000. $130.000. B. $500. E.000. What is the minimum amount of assets an operating segment must have to be considered a reportable segment? A.000.000. $2.000 profit. DVDs and VCRs. B. and MP3s. D. VCRs and MP3s. DVDs only. DVDs and MP3s. and MP3s. B. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. D. 42. VCRs. DVDs. E. E. and MP3s. VCRs. VCRs and MP3s. DVDs and VCRs. C. D. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. 8-60 . B.Chapter 08 . Which operating segments are separately reportable under the operating profit or loss test? A. C. E. Which operating segments are separately reportable under the revenues test? A. DVDs and VCRs. DVDs. DVDs. DVDs and MP3s. DVDs only. VCRs. VCRs and MP3s. Which operating segments are separately reportable under the assets test? A. 43.Segment and Interim Reporting 41. DVDs and MP3s. C. DVDs only. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. DVDs and MP3s.Segment and Interim Reporting 44. B. VCRs and MP3s. GAAP regarding segment or enterprise-wide disclosure? A. A company comprised of only one operating segment does not have to report geographic area information. E. D.S. and MP3s. Which of the segments are separately reportable? A. DVDs. Geographic area information must be disclosed in interim financial statements. VCRs. Segment information does not have to be in accordance with generally accepted accounting principles. 45. DVDs only. 8-61 .Chapter 08 . D. C. Which of the following statements is true according to U. E. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-03 List the basic disclosure requirements for operating segments. Disclosure of a major customer's identity is required. A reconciliation of segment assets to consolidated assets is required. B. DVDs and VCRs. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Which of the following operating segment disclosures is not required by U. D. Which of the following items does Vapor not have to report for this segment? A. D. B. 47. Research and development expense. An operating segment's assets are 10 percent or more of combined segment assets. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-03 List the basic disclosure requirements for operating segments. Depreciation expense. An operating segment's assets are 10 percent or more of consolidated assets. An operating segment's assets are 10 percent or more of combined segment liabilities. Extraordinary items. Interest expense. 8-62 . E. Intersegment sales.Chapter 08 . E. Which of the following is a criterion for determining whether an operating segment is separately reportable? A. Discontinued operations. An operating segment's assets are 10 percent or more of corporate assets. Liabilities. E. D. Interest income. C. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-03 List the basic disclosure requirements for operating segments. C.Segment and Interim Reporting 46. B. GAAP? A. B. 48. An operating segment's assets are 10 percent or more of consolidated liabilities. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Amortization expense. Interest expense. Vapor Corporation has a fan products operating segment.S. D. E. GAAP? A. C. Operating profit or loss.S. 50. The segment is regularly reviewed by a chief decision maker to assess performance decisions. Total assets. Gross profit. B. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-01 Understand how an enterprise determines its operating segments and the factors that influence this determination.S. 8-63 . Discrete financial information generated by the internal accounting system is available. An organizational unit can not be an operating segment if all of its operating transactions are only with other segments of the organization. Which of the following is not true for an operating segment according to U. Which of the following must be disclosed by a geographic segment according to U. The segment is regularly reviewed by a chief decision maker to make resource allocations.Chapter 08 . Revenues from external customers. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-04 Determine when and what types of information must be disclosed for geographic areas.Segment and Interim Reporting 49. Revenues from internal customers. GAAP? A. B. The segment earns revenues and incurs expenses. D. C. E. Segment and Interim Reporting 51. E. All Other Countries. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Taiwan. D. In determining reportable segments. In determining reportable segments. Canada. France. B. C. United States. United States. at least 80% of the revenues from external customers must be reported. Asia. company to provide information by geographic area? A. In determining reportable segments. 8-64 . which of the following would be an acceptable grouping by a U. Europe. B. 53. South America. Asia. D. Germany. All Other Countries. Germany. three tests are applied and only one must be met.Chapter 08 . Mexico.S. In determining reportable segments. Spain. United States. United States. United States. D. United States. United States. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-04 Determine when and what types of information must be disclosed for geographic areas. Canada. C. North America. two tests are applied and only one must be met. C. Africa. three tests are applied and all three must be met. B. Spain. E. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Easy Learning Objective: 08-04 Determine when and what types of information must be disclosed for geographic areas. Europe. Which of the following statements is true? A. Central America. GAAP. According to U. two tests are applied and both must be met. E. All Other Countries. 52. Mexico.S.S. Germany. Europe. Germany. All Other Countries. company for presentation of information by geographic area? A. Which of the following would be an acceptable grouping for a U. In determining reportable segments. In the same way as they are recognized on an annual basis. The length of time the customer has been a customer of the company. On an annualized basis. GAAP require to be disclosed for a major customer? A. On a seasonal basis. How should revenues be recognized in interim periods? A.S. D. The percentage of sales derived from the customer. E. The operating segment reporting sales to the customer. B. E. On the cash basis. The geographic area of the customer. 55.Segment and Interim Reporting 54. D. There are no revenues recognized in interim periods.Chapter 08 . What information does U. The identity of the customer. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. B. 8-65 . AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-05 Apply the criterion for determining when disclosure of a major customer is required. C. Inc. During the first quarter. Which of the following is not correct regarding inventory procedures reported in an interim financial statement? A.000 units of inventory costing $25 per unit. During the second quarter.Chapter 08 . began the first quarter with 1. D.000 units were purchased at a cost of $40 per unit.Segment and Interim Reporting 56. Lower-of-cost-or-market adjustments are not made for the interim period if they are expected to reverse by the end of the year. LIFO liquidations expected to be replaced by the end of the year are accounted for in cost of goods sold at expected replacement cost rather than original LIFO cost. C. LIFO liquidations not expected to be replaced by the end of the year are reflected in cost of goods sold at original LIFO cost. FIFO is remeasured using the LIFO method in an interim financial statement. Cement Company. E. 8-66 . and sales of 3. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. the company expects to replace the units of beginning inventory sold at a cost of $45 per unit. Variances in a standard costing system are reported at the end of the interim period unless they are expected to be absorbed by year-end. Cement Company uses the LIFO method to account for inventory.400 units at $65 per units were made. 3. B. 000 E. Option B C.Chapter 08 .000 C. Option A B. The amount of gross profit for the first quarter is: A. Option C D.000 D. 58. $250.000 AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. 8-67 . What is the correct journal entry to record cost of goods sold at the end of the first quarter? A. $221. $83.000 B. $87. Option E AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. $90.Segment and Interim Reporting 57. Option D E. Postpone recording of the change to the annual income statement. Retrospectively restate the first-quarter income statement. Record the loss in the first quarter as an extraordinary loss. B. Betsy Kirkland. The loss is considered immaterial to the twelve-month period. and record it in the annual statement only. 8-68 . Adjust financial statements for each prior period presented to reflect the effects of the new principle in those reported periods. net of income taxes. 60. These changes are prohibited by GAAP. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. but is material in amount relative to the first quarter. Ignore the loss. net of income taxes. C. Ignore the loss in the first quarter. Record the change in the third-quarter income statement. as though the change occurred at the beginning of the year. but not as an extraordinary loss. The proper accounting treatment in the first quarter interim statement is to: A. B. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Record the loss in the first quarter.Chapter 08 . How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement? A. D. D. and disclose the loss in a separate note or in the income statement as a separate line item. E. Inc. Record one-fourth of the loss in the first quarter as an extraordinary loss. net of income taxes. incurred a flood loss during the first quarter of 2011 that is deemed both unusual and infrequent. E.Segment and Interim Reporting 59. net of income taxes. B. Provision for income taxes. Significant changes in estimates or provisions for income taxes. C. E.Segment and Interim Reporting 61. Earnings per share. Sales or gross revenues. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. Disposal of a segment. D. C. Gains on sales of major equipment. net of income taxes. D.Chapter 08 . Which of the following is not a required disclosure in an interim financial report? A. 8-69 . Gross profit. Extraordinary items. Net income. 62. Earnings per share. E. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. B. Which of the following is not a required disclosure in an interim financial report? A. E. C. Which of the following items of information are required to be included in interim reports for each operating segment? (I. Recognized in the third quarter. D. II and III. II and III only. Recognized at year-end only. Ignored. II. 64.) Reconciliation of segment profit or loss to the enterprise's total income before taxes (IV. I. I and II only. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. 8-70 .) Segment profit or loss (III.) Intersegment revenues A. I. D. E. and IV. How are extraordinary gains reported in a third quarter interim financial report? A. Recognized in the first quarter. I and III only. B. III. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.) Revenues from external customers (II. B.Segment and Interim Reporting 63.Chapter 08 . Recognized ratably over the first three quarters. Change in accounting principle. Bonus expense. E. Indiscrete and terminal. B. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Which of the following is reported for interim financial reports using the integral approach? A. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. D. Property tax expense.Segment and Interim Reporting 65. E. Cash basis accounting. B. C. E. D. Extraordinary gains. 8-71 . B. 66. C. Discrete and integral. Extraordinary gains. Extraordinary losses. Discrete and metric. 67. What are the two approaches that can be followed in preparing interim reports? A. Discrete and terminal. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Metric and integral.Chapter 08 . Which of the following is reported for interim financial reports using the discrete approach? A. Seasonal items. D. Change in accounting principle. Income tax expense. and a supplemental report for the 12-month period ended at the interim date should supplement the interim report. The seasonal nature should be disclosed. Total assets. 8-72 .Chapter 08 . The financial statements should be adjusted to reflect the assumption that no seasonal revenues could be earned. B. How should seasonal revenues be reported in an interim financial statement? A. Total current liabilities. B. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. D. C. 69. and a pro forma report for the next 12-month period should supplement the interim report. The seasonal nature should be disclosed but no other reports should accompany the interim report. Gross revenues. E. E. Seasonal revenues have no particular reporting requirement. Which of the following are required to be disclosed in interim reports? A. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports.Segment and Interim Reporting 68. C. Change in cash. D. Cash flows from investing activities. The seasonal nature should be disclosed. E. B. Intersegment revenues. 8-73 . The loss should always be recorded in the interim period in which market value drops below cost. D. What is the appropriate treatment in an interim financial report for inventory that has market value below cost? A. C. C. All of the following are required to be reported in interim financial statements for a material operating segment except: A. The loss should be ignored for interim reporting purposes. 71. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. D. Segment revenues from external customers. There is no loss to report. The loss should be recorded in the interim period in which market value drops below cost if the loss is considered temporary.Segment and Interim Reporting 70. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Reconciliation of segment profit or loss to total income before taxes. E. The loss should be recorded in the interim period in which market value drops below cost if the loss is considered permanent. Segment assets. Segment profit or loss.Chapter 08 . B. The loss should be recorded in the interim period in which cost drops below market value if the loss is considered permanent. The loss should always be recorded in the interim period in which cost drops below market value.Segment and Interim Reporting 72. What is the appropriate treatment in an interim financial report for inventory that has cost below market value? A. D. D. 73. E. B. The LIFO liquidation should always be reflected in gross profit on an interim income statement. What is the appropriate treatment in an interim financial report for a LIFO liquidation? A. C. The loss should be ignored for interim reporting purposes. The LIFO liquidation is always ignored for interim reporting. The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim balance sheet and the interim income statement. The loss should be recorded in the interim period in which cost drops below market value if the loss is considered temporary. The LIFO liquidation should only be reflected in gross profit on an interim income statement if it is determined that it will not be replaced by year-end. The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim income statement but not the interim balance sheet.Chapter 08 . B. There is no loss to report. C. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. 8-74 . E. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. The variances are always ignored for interim reporting. The variances expected to be absorbed by year-end should not be reflected in the interim statement. B. What is the appropriate treatment in an interim financial report for variances arising from the use of a standard costing system? A. Revenues should be recognized on the income tax basis for interim reporting. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. The variances should only be reflected in the interim balance sheet. E. The variances should always be reflected in the interim income statement but not the interim balance sheet. The variances should always be reflected in gross profit on an interim income statement. 8-75 . C. E. 75. The percentage-of-completion method of reporting long-term construction projects is not an acceptable method for interim reporting. B.Chapter 08 . AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Which of the following statements is true regarding the reporting of revenues in an interim report? A. D. Projected losses on long-term contracts should be deferred to the annual report.Segment and Interim Reporting 74. C. D. Revenues should be recognized in interim periods in the same way as they are on an annual basis. Revenues should be recognized on the cash basis of accounting for interim reporting. 2. and 4 D. and ignored in all future periods. 3. Provo.Segment and Interim Reporting 76. and 3 C. 1. D. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. How should contingencies be reported in an interim report? A. Recorded as gains or losses as incurred. Inc. Provo expects the annual tax rate to be 32 percent because of anticipated tax credits. Pretax income for the first quarter was $300. At the end of the second quarter of 2011. 77.000. 2. and 4 AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Which of the following costs require similar treatment to Property Tax Expense in an interim financial report? 1) Annual major repairs.Chapter 08 . Disclosed the same way as they are disclosed in annual reports. Pretax income for the second quarter was $350. and 4 E. has an estimated annual tax rate of 35 percent in the first quarter of 2011. 2) Advertising expense. 1 and 2 B. 2. A. 1. 1. 3. E. Assume no items in either quarter requiring the net-of-tax presentation. B. Disclosed in the interim period discovered. C. 8-76 . 4) Quantity discounts based on annual sales. if estimable. Ignored.000. Recorded as gains or losses only if material. 3) Bonus expense. 2. 000. How much income tax expense is recognized in the second quarter of 2011? A. $112. D. $104. Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. The following additional information is available: 8-77 .000. Baker has an effective income tax rate of 30 percent and 100. C. C. $105.Chapter 08 . B.250.000.Segment and Interim Reporting 78.000. How much income tax expense is recognized in the first quarter of 2011? A.500. $103. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. $122. $26. $208. D. E.000 shares of common stock issued and outstanding. $0. $96. $112.000. B.000.000. 79. E. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. 81. C.00. 8-78 .92. B. $492. D. Assuming Baker makes the change in the first quarter of 2011. $5. $505. C.Segment and Interim Reporting 80.200.Chapter 08 . B. E. E. $4.95. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.950. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.28. $5.000. how much is reported as net income for the first quarter of 2011? A. compute net income per common share.05. D. $4. Assuming Baker makes the change in the first quarter of 2011. $527.000. $494.800. $5. $500. A. D.750.Chapter 08 . $322.950.000 net income is earned during the second quarter. $405.000. E. Assuming Baker makes the change in the first quarter of 2011 and that $400. $427. $300. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. 8-79 . $894. B.850. Assuming Baker makes the change in the first quarter of 2011.Segment and Interim Reporting 82. 83. $277. E.000. B. how much is reported as net income for the first quarter of 2010? A. $335. $400.250. $265.200. D.200. how much is reported as net income for the second quarter of 2011? A. C.000. C. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.000. $905. C. E. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-08 Recognize differences between U. A condensed statement of financial position. B. all of the following are part of minimum components of interim financial reporting except: A. D. GAAP and IFRS in segment and interim reporting. No company may publish a fourth-quarter report. how is the fourth quarter reported? A. A condensed statement of cash flows. C. E. For companies that provide quarterly reports. No fourth-quarter report is required. special accounting items should be disclosed in the annual financial statements. B. According to International Financial Reporting Standards (IFRS). Every company that reports for the first three quarters must also publish a fourth-quarter report. 85. 8-80 . The SEC requires selected quarterly financial data to be reported separately as a fourthquarter report.Segment and Interim Reporting 84.S. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports. A condensed statement of stockholders' equity.Chapter 08 . When fourth-quarter financial statements are provided. D. A condensed statement of net income and comprehensive income. Accrual of income tax expense at the end of each interim period. GAAP. 8-81 . and (c. Which of the following is false with regard to accounting standards for segment reporting according to International Financial Reporting Standards (IFRS) and U. IFRS and U.Chapter 08 . GAAP both require disclosure of total assets. the objective of segment reporting is to provide information to help users of financial statements: (a. B.S. IFRS and U. GAAP and IFRS in segment and interim reporting. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-08 Recognize differences between U. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-01 Understand how an enterprise determines its operating segments and the factors that influence this determination.) make more informed judgments about the enterprise as a whole. D. GAAP both require disclosure of intangible assets attributable to geographic segments. operating segments can be based on geographic areas.) better understand the enterprise's performance. E. GAAP do not each require disclosure of segment liabilities.) better assess its prospects for future net cash flows.S. GAAP? A. (b. IFRS and U. operating segments can be based on products and services. What is the major objective of segment reporting? According to U. C.Segment and Interim Reporting 86.S.S. Essay Questions 87.S. According to IFRS.S. According to IFRS. Chapter 08 .S. 90. companies must publish quarterly reports to provide investors and creditors with relevant information on a more timely basis than is provided by an annual report. What is meant by the term. That rate is then applied to the cumulative pre-tax income earned to date to determine the cumulative income tax to be recognized to date. How does a company measure income tax expense to be reported in an interim period? Income tax expense related to interim period income is determined by estimating the effective tax rate for the entire year. Why are quarterly financial statements required to be published for publicly traded companies in the U. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. The amount of income tax recognized in the current interim period is the difference between the cumulative income tax to be recognized to date and the income tax recognized in prior interim periods. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Easy Learning Objective: 08-01 Understand how an enterprise determines its operating segments and the factors that influence this determination. 89. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.? Publicly traded U.Segment and Interim Reporting 88. 8-82 .S. disaggregated financial information? Disaggregated financial information is the data of a reporting unit that has been broken down into components so that the separate parts can be identified and studied. for determination of how a business is divided into segments? The management approach for segment determination is used. operating profit or loss. the total sales revenuesto unaffiliated customers are summed. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. then there is not a sufficient number of operating segments disclosed and there should be additional segment disclosure. and assets.Chapter 08 . If this sum is less than 75% of total salesto outsiders.S. 92. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. What two disclosure guidelines for operating segment information are designed to ensure the consistency of data reported from year to year? 1) If an operating segment does not pass a test for current segment disclosure but was a reportable segment in the past year(s) included in the current comparative report and management deems it as having continued significance. 93. then prior years must be restated to show that segment comparatively with the current year.Segment and Interim Reporting 91. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-01 Understand how an enterprise determines its operating segments and the factors that influence this determination. GAAP. Describe the test to determine whether a sufficient number of operating segments are disclosed. 8-83 . For operating segments deemed reportable by having passed a 10% threshold test of revenues. What approach is used. according to U. 2) If an operating segment is to be disclosed in a current year and was not separately disclosed in prior comparative years. then that segment should be disclosed currently to be comparative to prior periods. S.) Factors used to identify operating segments.S. (2. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.Chapter 08 . GAAP. GAAP does not require common costs to be allocated to individual segments to determine segment profit or loss if this is not done for internal purposes. how should common costs be allocated to individual segments to determine segment profit or loss? U. what general information about an operating segment needs to be disclosed? The general information about an operating segment that needs to be disclosed per U. According to U. GAAP includes: (1. Any allocations that are made must be done on a reasonable basis. 95. GAAP.Segment and Interim Reporting 94. 8-84 . AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy Learning Objective: 08-03 List the basic disclosure requirements for operating segments.S.) Types of products and services from which each operating segment derives its revenues. According to U.S. (2. The five aggregation criteria are: (1. List the five aggregation criteria that need to be considered by management in determining whether business activities and environments are similar.S. What is the purpose of the U. (5. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. 8-85 .) The type or class of customer.) The nature of the production process. the nature of the regulatory environment.Segment and Interim Reporting 96. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure.Chapter 08 . GAAP seventy-five percent requirement for industry segment disclosure? A substantial portion of the company's operations should be presented in disaggregated form. (3. 97. (4.) If applicable.) The distribution methods.) The nature of the products and services provided by each operating segment. The seventy-five percent requirement is the GAAP guideline in making sure companies report information about enough segments. (5.) Other significant noncash items included in segment profit or loss.Segment and Interim Reporting 98. What related items need to be disclosed in regard to total segment assets? The related items in regard to total segment assets that need to be disclosed include: (1. (7. what revenues and expenses included in segment profit or loss need to be disclosed? The revenues and expenses included in segment profit or loss that need to be disclosed include: (1. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-03 List the basic disclosure requirements for operating segments. net interest revenue may be reported for finance segments if this measure is used internally for evaluation.Chapter 08 .) Depreciation. (2. 8-86 . According to U. depletion. (3. GAAP.) Investment in equity method affiliates.) Revenues from external customers.) Expenditures for additions to long-lived assets. (4.S. (6. and amortization expense.) Income tax expense or benefit. (2.) Revenues from transactions with other operating segments.) Interest revenue and interest expense (reported separately). 99. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-03 List the basic disclosure requirements for operating segments.) Unusual items (discontinued operations and extraordinary items). ) Revenues from external customers. (4.) Total assets.Chapter 08 . Which two items of information must be reported for (1) the domestic country. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-07 List the minimum disclosure requirements for interim financial reports.) Revenues from external customers. 8-87 . (2) all foreign countries in which the enterprise derives revenues or holds assets.) Intersegment revenues. (2. and (3) each foreign country in which a material amount of revenues is earned? The two items of information are: (1. AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Medium Learning Objective: 08-04 Determine when and what types of information must be disclosed for geographic areas. 101. if there has been a material change from the last annual report. Which items of information are required to be included in interim reports for each operating segment? The items of information that are required to be included in interim reports for each operating segment are: (1.) Segment profit or loss. (2.Segment and Interim Reporting 100.) Long-lived assets. (3. Burnside Corp. is organized into four operating segments.Segment and Interim Reporting 102. The following segment information was generated by the internal reporting system in 2011: Required: 1) What was the profit or loss of each of these segments? 2) Prepare the profit or loss test to determine which of these segments was separately reportable. 8-88 .Chapter 08 . Requirements (1) and (2) AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Prepare the revenue test and determine which of these segments was separately reportable. and (5) finance. (4) paper. intersegment revenues transfers. (3) lumber.Segment and Interim Reporting Faru Co.5 (in thousands) of revenues. and interest income. 8-89 . (2) metals. identified five industry segments: (1) plastics. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. Each of these segments had been consolidated appropriately by the company in producing its annual financial statements.333. Reportable segment = at least $1.Chapter 08 . Information describing each segment is presented below (in thousands). 103. Revenues include sales to outside parties. Reportable = at least $436. Expenses include operating expenses and interest expense.Chapter 08 . and interest income. Prepare the profit or loss test and determine which of these segments was separately reportable. 8-90 . Revenues include sales to outside parties. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. intersegment revenues transfers.Segment and Interim Reporting 104.6 (in thousands) of profit or loss. Reportable = at least $832.Chapter 08 .Segment and Interim Reporting 105. Prepare the asset test and determine which of these segments was separately reportable. (in thousands) of assets AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. 8-91 . Assets include tangible assets and intangible assets. ) Which operating segments are reportable under the revenue test? (b. what is the minimum amount an operating segment must have in order to meet the asset test for a reportable segment? (g.Chapter 08 . what is the minimum amount an operating segment must have in order to meet the profit or loss test for a reportable segment? (e. Blanton Corporation is comprised of five operating segments.) Which operating segments are reportable under the profit or loss test? (d.) According to the test results for reportable segments.) What is the total amount of revenues in applying the revenues test? (c.) In applying the asset test.Segment and Interim Reporting 106.) Which operating segments are reportable under the asset test? (f.) In applying the profit or loss test. Information about each of these segments is as follows (in thousands): Required: (a.) Which operating segments are reportable? (h. is there a sufficient number of reported segments or should any additional segments also be disclosed? Explain the reason for your conclusion. 8-92 . 8-93 .Segment and Interim Reporting h.Chapter 08 . $383 exceeds the threshold for the 75% test. There are a sufficient number of reportable segments per the reportable tests because total sales to outsiders = $397 (numbers all in thousands). and the four reportable segments have total sales to outsiders of $383. 75% of 397 = $298. 2011. How much of this expense should be included in Cleveland's net income for the quarter ending March 31. Cleveland.000/4].000 [$300. Prepare the journal entry for the payment of property taxes on February 23.Chapter 08 . 8-94 . 108. 2011? $75. 107. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Easy Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. On February 23.Segment and Interim Reporting AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-02 Apply the three tests that are used to determine which operating segments are of significant size to warrant separate disclosure. AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. paid property taxes of $300. 2011.. Inc.000 for the calendar year 2011. Assuming Gregor expects to replace the units of beginning inventory sold before the yearend at a cost of $41. 2011 was 100 units at a LIFO cost of $25 per unit. 2011? $9. 110. what is the amount of cost of goods sold for the quarter ended March 31. 2011? $10. what is the amount of cost of goods sold for the quarter ended March 31. Inventory for Gregor on January 1. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.665 [(200 x $40) + (65 x $41)]. and sales of 265 units at a retail price of $50 per unit were made.. During the first quarter of 2011.Segment and Interim Reporting Gregor. Assuming Gregor does not expect to replace the units of beginning inventory sold.625 [(200 x $40) + (65 x $25)]. Inc. 8-95 . 109. uses the LIFO cost-flow assumption to value inventory. 200 units were purchased costing an average of $40 per unit.Chapter 08 . AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. began operations on January 1. Harrison's effective income tax rate is 40 percent.000 shares of common stock outstanding at all times. AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. Compute the after-tax effect of Harrison's change in inventory method. and applied the LIFO method for inventory valuation. Harrison adopted the FIFO method of accounting for inventory. Additional information is as follows: The LIFO method was applied during the first quarter of 2011 and the FIFO method was applied during the second quarter of 2011 in computing income.Segment and Interim Reporting Harrison Company. Inc. On June 10.Chapter 08 . 2011. 2010. above. 111. Harrison has 500. 8-96 . 2010 and 2011. Purchases made in the last six months are expected to cost an average of $18 per unit.Chapter 08 . and expects at least 15. The following information for Urbanski Corporation relates to the three months ending June 30. 8-97 . Prepare a schedule showing the calculation of net income and earnings per share to be reported by Harrison for the three-month period and the six-month period ended June 30. 2011: Urbanski uses the LIFO method to account for inventory. Net Income and Earnings per Share for 2nd Quarter 2011: AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Hard Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.000 units to be on hand in the ending inventory at year-end.Segment and Interim Reporting 112. 8-98 . assuming Urbanski expects to maintain 11.Segment and Interim Reporting 113.000 units] AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.000 units in inventory at year-end. 114. Prepare the journal entries to reflect the sales and cost of goods sold. Determination of Cost-of-Goods-Sold and Gross Profit AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period. 2011.Chapter 08 .$10) x 5. Compute cost of goods sold and gross profit for the quarter ending June 30. Refer To: 08-114 Journal Entries to Record Sales and Cost-of-Goods-Sold Excess of replacement cost over historical cost for beginning inventory liquidated: [($18 . assuming Urbanski does not expect to replace the liquidated inventory at year-end. Prepare the journal entries to reflect the sales and cost of goods sold. 8-99 . Refer To: 08-114 Journal Entries to Record Sales and Cost-of-Goods-Sold AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Bloom's: Application Difficulty: Medium Learning Objective: 08-06 Understand and apply procedures used in interim reports to treat an interim period as an integral part of the annual period.Segment and Interim Reporting 115.Chapter 08 . 7.Chapter 08 .Segment and Interim Reporting Matching Questions 116. Required to be disclosed by an operating segment. Required to be disclosed by an operating segment. 9. when applicable. 4. but not an operating segment Revenues for the domestic country. 2 7 2 1 2 2 7 2 2 10 1 8-100 . but not a Revenues from transactions with geographical segment other segments. Required to be disclosed by both an operating segment and a geographical segment Income tax expense or benefit. but not a geographical segment Names of major customers. 6. 3. but not a geographical segment Cash flow information AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Comprehension Difficulty: Hard Learning Objective: 08-03 List the basic disclosure requirements for operating segments. select the best answer concerning segment disclosures of reportable segments. Required to be disclosed by an operating segment. Learning Objective: 08-04 Determine when and what types of information must be disclosed for geographic areas. 5. but not a geographical segment Revenues from external customers. but not a which each segment derives its geographical segment revenues. 10. Required to be disclosed by a geographical segment. Not required to be disclosed by either an operating segment or a geographical segment Factors used to identify segments. but not a Discontinued operations and geographical segment extraordinary items. Required to be disclosed by an operating segment. For each of the following situations. Required to be disclosed by an Types of products and services from operating segment. 1. Not required to be disclosed by either an operating segment or a geographical segment Interest revenue. 8. Required to be disclosed by both an operating segment and a geographical segment Long-lived assets. 2. Required to be disclosed by an operating segment. 11.