Ch 9 Answers 2008

CHAPTER 9 INTERIM REPORTING AND SEGMENT REPORTING 9.1

Angel Company

Angel Company Income Statement For the Quarter Ended October 31, 2007

Net sales (30% x 9,000,000)

P

Cost of goods sold Gross profit (38% x 2,700,000)

P

Operating expenses * Profit from Continuing Operations Income Tax Net Profit from Continuing Operations Discontinued Operations, net of income tax savings of P455,000 Net profit (loss) *Operating Expenses: Variable = 30% x 600,000 Fixed = (960,000 – 600,000) /4 Total 9.2

P P P

2,700,00 0 1,674,00 0 1,026,00 0 270,000 756,000 241,920 514,080 (845,000 ) (330,920 )

P180,000 90,000 P270,000

Galaxy Company Galaxy Company Income Statement For the Month of October 2006 Net sales Cost of goods sold: Merchandise Inventory, October 1 Purchases Total goods available for sale Merchandise inventory, October 31 Cost of sales Gross profit Selling expenses General and administrative expenses Net profit

9.3

P

239,100

P

280,000 215,000 495,000 372,600 122,400 116,700 (54,700) (19,000) 43,000

P P P

Blue Bay

Considering the criteria, Segment D is not qualified because majority of its revenue comes from transactions with other segments. Minimum required assets Minimum required revenue Minimum required operating result (profit or loss)

P5,000,000 8,600,000 2,000,000

Chapter 9 – Interim Reporting and Segment Reporting Reportable segments are A, B, C and E. (61M/66M is 92%).

9-4

The 75% test has also been met

Minimum operating result (profit or loss)

P1,100,000

Reportable segments based on the above test are B, D and E.

9.4

Polygon Corporation Minimum required revenues Minimum required operating profit Minimum required identifiable assets

P3,275,000 580,000 6,800,000

Identified reportable segments, based on any of the above tests: A, B, C, D and E Multiple Choice Interim Reporting MC1 MC2 MC3 MC4 MC5 MC6 MC7 MC8 MC9 MC10 MC11 MC12 MC13 MC14 MC15

A D B B A B B C B A B B B C A

MC16 MC17 MC18 MC19 MC20

C A D A D

MC1 MC2 MC3 MC4 MC5

D A B B C

320,000 X ¼ = 80,000 End of January = 200,000 + 50,000 – 192,000 = 58,000 End of February = 58,000 + 380,000 – 408,000 = 30,000 End of March = 30,000 + 704,000 – 604,000 = 130,000 (600,000 x ½) + (1,200,000 x ½) = 900,000 (25,000,000 X 10%) – (10,000,000 X 5%) = 2,000,000 (45,000,000 X 10%) – (20,000,000 X 5%) = 3,500,000 Segment Reporting

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Chapter 9 – Interim Reporting and Segment Reporting MC6 MC7 MC8 MC9 MC10 MC11 MC12 MC13 MC14 MC15

C A B A D C D A C B

10% (1,000,000 + 300,000) 500,000 – 225,000 – (240,000 X 500,000/1,500,000) 2,000,000 – 900,000 – (3,000,000 X 2M/10M) 10% (153,000,000 – 140,000,000) 4,000,000 – 2,200,000 – (1,200,000 X 1,800,000/3,000,000)=1,080,000

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