ter 8 Homework Saved Help Taft Corporation operates primarily in the United Stat
ID: 2542325 • Letter: T
Question
ter 8 Homework Saved Help Taft Corporation operates primarily in the United States. However, a few years ago, it opened a plant in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece. Financial information for each of these facilities follows: Italy Greece Sales Intersegment transfers Operating expenses Interest expense Income taxes Long-lived asseta 215,000 640,000 490,000 100,000 230,000 35,000 50,000 190,000140,000 212,000 32,000 83,000 131,000 100,800 246,000 45,000 35,000 eBook Print eferences The company's domestic (U.S.) operations reported the following information for the current year: Sales to unaffiliated customers Intersegment transfers Operating expenses Interest expense Income taxes Long-lived assets $ 4,660,000 507,000 2,490,000 176,000 899,000 2,280,000 Taft has adopted the following criteria for determining the materiality of an individual a. Calculate sales to unaffllated customers within a country and as a percent of the consolidated sales. b. Calculate long-lived assets within a country and as a percentage of the long-lived assets. c. Apply Taft's materiality tests to identify the countries which are 10 percent or more of consolidated sales or consolidated long-lived assets to be reported separately. Prey 30, 4 Next >Explanation / Answer
Solution:
a) Calculation of the Sales Unaffiliated Customers within a Country and as Percent of the Consolidated Sales:
Revenue Test (Sales to Unaffiliated Parties):
b) Calculation of the Long-Lived Assets within a Country and as Percentage of the Long Lived Assets:
Long-lived Asset Test:
c) Individual Foreign Countries does not Accept the Revenue or Long Lived Assets Materiality Tests, So Foreign Country Must be Reported Separately. In the Problem, the information must be Separately Presented for the United States, but it is Combined for all Other Countries.
Revenues Percentages United States $4,660,000 77.60% Spain $215,000 3.58% Italy $640,000 10.66% Greece $490,000 8.16% Total $6,005,000 100%Related Questions
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