Vehicle Corporation is organized into four operating segments. The internal repo

Question

Vehicle Corporation is organized into four operating segments. The internal reporting system generated the following segment information Revenues from Intersegment Operating Outsiders $ 4,017,000 3,517,000 2,617,000 Transfers $ 117,000 217,000 Expenses Autos Trucks SUVs Motorcycles s 3,617,000 4,017,000 2,017,000 1,037,000 917,000 67,000 The company incurred additional operating expenses (of a general nature) of $1,217,000 a. What is the profit or loss of each of these segments? b. Perform the profit or loss test to determine which of these segments is separately reportable

Explanation / Answer

a Autos Trucks SUVs Motorcycles Total Sales $4,017,000 $3,517,000 $2,617,000 $917,000 Add: Intersegment transfer $117,000 $217,000 $0 $67,000 Less: Operating Expenses $3,617,000 $4,017,000 $2,017,000 $1,037,000 Profit/Loss $517,000 -$283,000 $600,000 -$53,000 $781,000 b $781,000 x 10% = $78,100 Two segments Autos & SUVs, but Trucks & Motorcycles, can be reported separately because ($283,000) & ($53,000) is less than $78,100

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