Vehicle Corporation is organized into four operating segments. The internal repo
ID: 2520817 • Letter: V
Question
Vehicle Corporation is organized into four operating segments. The internal reporting system generated the following segment information Revenues from Intersegment Operating Expenses Outsiders Transfers 200,000 50,000 s 100,000 3,600,000 Autos Trucks SUVs Motorcycles $4,000,000 3,500,000 2,600,000 900,000 4,000,000 2,000,000 1,020,000 The company incurred additional operating expenses (of a general nature) of $1,200,000 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 reportableExplanation / Answer
Calculation of Segment Profit or Loss
Segment Profit or loss = Revenue from outsiders+Intersegment Transfers-Operating Expenses
Reportable Segments
Total Segment Profit = 1,100,000
10% of Total Segment Profit = 110,000
Therefore all the segments having profit greater than 110,000 are reportable. Therefore Autos and SUVs segment should be reported separately.
Profit Loss Autos 500,000 Trucks 300,000 SUVs 600,000 Motorcycles 70,000 Total 1,100,000 370,000Related Questions
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