Taft Corporation operates primarily in the United States. However, a few years a
ID: 341679 • Letter: T
Question
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:
The company’s domestic (U.S.) operations reported the following information for the current year:
Taft has adopted the following criteria for determining the materiality of an individual foreign country:
A. Calculate sales to unaffiliated 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.
Spain Italy Greece Sales $ 213,000 $ 636,000 $ 486,000 Intersegment transfers 0 102,400 96,000 Operating expenses 208,000 242,000 226,000 Interest expense 28,000 41,000 31,000 Income taxes 79,000 31,000 46,000 Long-lived assets 126,000 186,000 136,000Explanation / Answer
USA Percentage to total Spain Percentage to total Italy Percentage to total Greece Percentage to total Total Long lived 2260000 62.87 213000 5.92 636000 17.69 486000 13.52 3595000 sales 4620000 91.16 126000 2.49 186000 3.67 136000 2.68 5068000
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