Chapter 14: Final

Current authoritative pronouncements require the disclosure of segment information when certain criteria are met. Which of the following reflects the type of firm and type of financial statement for which this disclosure is required?

Annual and interim financial statements for publicly held companies.

For interim financial reporting, the effective tax rate should reflect:

Anticipated Tax Credits, Yes; Extraordinary Items, No

An enterprise determines that it must report segment data in annual reports for the year ended December 31, 2017. Which of the following would NOT be an acceptable way of reporting segment information?

As a special report issued separately from the financial statements.

In considering interim financial reporting, how did the Accounting Principles Board conclude that each reporting should be viewed?

As reporting for an integral part of an annual period.

Which of the following is NOT a segment asset of an operating segment?

Assets maintained for general corporate purposes

Which of the following is NOT part of the information about foreign operations that is required to be disclosed?

Capital expenditures

Which of the following is NOT required to be disclosed by SFAS No. 131?

Information related to an enterprise's major suppliers.

For external reporting purposes, it is appropriate to use estimated gross profit rates to determine the ending inventory value for:

Interim Reporting, Yes; Annual Reporting, No

Which of the following reporting practices is permissible for interim financial reporting?

Use of the gross profit method for interim inventory pricing.

Determine the amount of revenue for each of the three segments that would be used to identify the reportable industry segments in accordance with the revenues test specified by SFAS 131. Revenue test (dollars in thousands) Wholesale Segment Retail Segment Finance Segment Sales to unaffiliated customers $3,600 $1,500 $-0- Sales - intersegment 400 240 -0- Loan interest income - intersegment -0- 120 900 Loan interest income - unaffiliated -0- 240 80 Income from equity method investees -0- 280 -0-

Wholesale, 4,000; Retail, 1,980; Finance, 980

An entity is permitted to aggregate operating segments if the segments are similar regarding the:

all of these

SFAS No. 131 requires the disclosure of information on an enterprise's operations in different industries for:

each annual period presented and each interim period presented.

For interim financial reporting, a company's income tax provision for the second quarter of 2017 should be determined using the:

effective tax rate expected to be applicable for the full year of 2017 as estimated at the end of the second quarter of 2017.

Companies using the LIFO method may encounter a liquidation of base period inventories at an interim date that is expected to be replaced by the end of the year. In these cases, cost of goods sold should be charged with the:

expected replacement cost of the liquidated LIFO base.

Selected data for a segment of a business enterprise are to be separately reported in accordance with SFAS No. 131 when the revenues of the segment is 10% or more of the combined:

external and internal revenue of all reportable segments.

When a company issues interim financial statements, extraordinary items should be:

included in the determination of net income in the interim period in which they occur.

A component of an enterprise that may earn revenues and incur expenses, and about which management evaluates separate financial information in deciding how to allocate resources and assess performance is a(n):

operating segment

Gains and losses that arise in an interim period should be:

recognized in the interim period in which they arise

A segment is considered to be significant if its:

reported profit (loss) is at least 10% of the combined reported profit of all operating segments not reporting a loss; and reported profit (loss) is at least 10% of the combined reported loss of all operating segments that reported a loss

Inventory losses from market declines that are expected to be temporary:

should not be recognized.

If a cumulative effect type accounting change is made during the first interim period of a year:

the cumulative effect of the change on retained earnings at the beginning of the year should be included in net income of the first interim period.

Which of the following does NOT have to be disclosed in interim reports?

All of these must be disclosed.

Which of the following disclosures is NOT required to be presented for a firm's reportable segments?

All of these must be presented

If annual major repairs made in the first quarter and paid for in the second quarter clearly benefit the entire year, when should they be expensed?

An allocated portion in each quarter of the year

Pale Company has four manufacturing divisions, each of which has been determined to be a reportable segment. Common operating costs are appropriately allocated on the basis of each division's sales in relation to Pale's aggregate sales. Pale's Delta division accounted for 40% of Pale's total sales in 2017. For the year ended December 31, 2017, Delta had sales of $5,000,000 and traceable costs of $3,600,000. In 2017, Pale incurred operating costs of $350,000 that were not directly traceable to any of the divisions. In addition, Pale incurred interest expense of $360,000 in 2017. In reporting supplementary segment information, how much should be shown as Delta's operating profit for 2017?

$1,260,000

In January 2017, Cain Company paid $200,000 in property taxes on its plant for the calendar year 2017. Also in January 2017, Cain estimated that its year-end bonuses to executives for 2017 would be $800,000. What is the amount of expenses related to these two items that should be reflected in Cain's quarterly income statement for the three months ended June 30, 2017 (second quarter)?

$250,000

During the second quarter of 2017, Clearwater Company sold a piece of equipment at a gain of $90,000. What portion of the gain should Clearwater report in its income statement for the second quarter of 2017?

$90,000

Long Corporation's revenues for the year ended December 31, 2017, were as follows: Consolidated revenue per income statement $800,000 Intersegment sales 105,000 Intersegment transfers 35,000 Combined revenues of all operating segments $940,000 Long has a reportable segment if that segment's revenues exceed

$94,000.

To determine whether a substantial portion of a firm's operations are explained by its segment information, the combined revenue from sales to unaffiliated customers of all reportable segments must constitute at least:

75% of the combined revenue from sales to unaffiliated customers of all operating segments.

An entity is permitted to aggregate operating segments that have similar economic characteristics under certain circumstances. Which of the following circumstances would allow aggregation of Entity A into Segment B?

Entity A was spun off from Entity C and is now owned directly by the parent entity