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)
Reportable segments are A, B, C and E.
(61M/66M is 92%).
45
P5,000,000
8,600,000
2,000,000
The 75% test has also been met
Chapter 9 – Interim Reporting and Segment Reporting
9-4
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
MC6
MC7
D
A
B
B
C
C
A
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
46
Chapter 9 – Interim Reporting and Segment Reporting
MC8
MC9
MC10
MC11
MC12
MC13
MC14
MC15
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
47