The following information applies to the questions displayed below.] Following i
ID: 2412010 • Letter: T
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The following information applies to the questions displayed below.] Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands) Segments Pink 330 Red White Blue $ 833 112 400 187 80 108 Black $ 142 Green Sales to outside parties Intersegment revenues Salary expense Rent expense Interest expense Income tax expense (savings) $1,832 37 635 160 86 162 $ 120 323 83 52 26 $ 535 130 423 102 103 82 113 70 (107) 37 338 63 35 (85) Consider the following questions independently. None of the six segments has a primarily financial nature a. What minimum revenue amount must any one segment generate to be of significant size to require disaggregated disclosure? (Enter your answer in dollars but not in thousands.) Answer is complete but not entirely correct. Minimum revenues $443Explanation / Answer
1. Total sales to outsiders of the total company = $1,832 + $833 + $535 + $330 + $142 + $120 = $3,792
Total Intersegment sales = $37 + $112 + $130 + $37 + $323 = $639
Total Revenues of the company = $3,792 + $639 = $4,431
The minimum revenue any one segment must generate to be of significant size to require disaggregated disclosure is 10% of the total revenue and the total revenue includes intercompany/intersegment sales and transfers.
Total Revenue in the given case is, $ 4,431 thousand.
Therefore a segment should generate a minimum of $443.1 thousand to be a significant size to require disaggregated disclosure.
The revenue should not be less than $443.1 thousand. So please put $443.1 instead of $443. If the answer doesn't take decimals, please enter $444 in the answer.
3. The minimum volume of revenues a single customer must generate to necessitate disclosing the existence of major customer is 10% of total revenue (total sales to outsiders) from him. In this case, the minimum volume is $379.2 thousand.
The revenue should not be less than $379.2 thousand. So please put $379.2 instead of $379. If the answer doesn't take decimals, please enter $380 in the answer.
4. Combined operating profit of all segments that had a profit = $1,095 + $470 + $161 + $329 = $2,055
Combined operating loss of all segments that had a loss = $115 + $243 = $358.
If Segment's Profit or Loss > 10% of $2,055 (=$205.5)
In this case, Red, Blue, Black and White are to be reported.
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