Exercise 24-3 Grouper Company is involved in four separate industries. The follo

Question

Exercise 24-3 Grouper Company is involved in four separate industries. The following information is available for each of the four industries Operating Segment Total Revenue Identifiable Assets Operating Profit (Loss) $15,130 2,400 $62,582 10,780 26,975 7,563 $107,900 $163,502 81,751 19,733 16,914 $281,900 (3,020) 1,090 $15,600 Determine which of the operating segments are reportable based on the Reportable Segments (a) Revenue test. (b) Operating profit (loss) test. (c) Identifiable assets test. Click if you would like to Show Work for this question Show Wo

Explanation / Answer

Ans : (a) Revenue test - if a segment revenue is 10 % or more compared with combined revenue of all segments . it is reportable as per revenue test.

W - 62,582/ 107,900 = 58.48 %

X - 10,780/107,900 = 9.99%

Y - 26,975 / 107,900 = 25 %

Z - 7,563/ 107,900 = 7 %

reportable segement as per revenue test - W , Y

(b) Total operating profit / loss test - if absolute amount is more than 10 % of all combined segments. it is reportable segment.

W - 15,130 /15,600 = 98.07 %

X - 2,400 / 15,600 = 15.38 %

Y - (3,020) / 15,600 = - 19.35 % = Absolute figure = 19.35 %

Z - 1,090 /15,600 = 6.98 %

Reportable segments are W, X , Y

(c) identifable assets test - if identifiable assets of a segment are more than 10 % of all segments assets, then they are reportable segments.

W - 163,502/ 281,900 = 58 %

X - 81,751 / 281,900 = 29 %

Y - 19,733 / 281,900 = 7 %

Z - 16,914 / 281,900 = 6 %

reportable segments are W, X

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