Apply threshold tests—Disclosure
Selected information, which is reported to the chief operating officer, for the five segments of Rad Company for the year ended December 31, 2011, is as follows:
|
Food |
Tobacco |
Lumber |
Textiles |
Furniture |
General Corporate |
Consolidated |
|
|
Revenue Data |
|||||||
|
Sales to unaffiliated |
$12,000 |
$10,000 |
$7,000 |
$18,000 |
$7,000 |
$ 54,000 |
|
|
customers |
|||||||
|
Sales to affiliated |
5,000 |
7,000 |
8,000 |
20,000 |
|||
|
customers |
|||||||
|
Income from equity |
3,000 |
$ 6,000 |
9,000 |
||||
|
investees |
|||||||
|
Total revenue |
$17,000 |
$17,000 |
$7,000 |
$29,000 |
$7,000 |
$ 6,000 |
$ 83,000 |
|
Expense Data |
|||||||
|
Cost of sales |
$10,000 |
$ 9,000 |
$4,000 |
$16,000 |
$4,000 |
$ 43,000 |
|
|
Depreciation |
1,000 |
2,000 |
2,500 |
3,000 |
500 |
9,000 |
|
|
expense |
|||||||
|
Other operating |
2,000 |
2,000 |
1,000 |
2,000 |
1,000 |
8,000 |
|
|
expenses |
|||||||
|
Interest expense |
2,000 |
2,000 |
$ 3,000 |
7,000 |
|||
|
Income taxes |
1,000 |
2,000 |
( 250 ) |
3,000 |
750 |
1,500 |
8,000 |
|
Net income |
$ 1,000 |
$ 2,000 |
$ (250 ) |
$ 3,000 |
$ 750 |
$ 1,500 |
$ 8,000 |
|
Asset Data |
|||||||
|
Segment assets |
$18,000 |
$19,000 |
$ 6,000 |
$22,000 |
$7,000 |
$ 72,000 |
|
|
Investment in |
20,000 |
$40,000 |
60,000 |
||||
|
affiliates |
|||||||
|
General corporate |
4,000 |
4,000 |
|||||
|
assets |
|||||||
|
Intersegment |
1,000 |
2,000 |
|||||
|
advances |
|||||||
|
Total assets |
$19,000 |
$21,000 |
$6,000 |
$42,000 |
$7,000 |
$44,000 |
$136,000 |
The lumber segment has not been a reportable segment in prior years and is not expected to be a reportable segment in future years.
REQUIRED
1. Prepare schedules to show which of the segments are reportable segments under:
a The 10% revenue test
b The 10% operating profit test
c The 10% asset test
2. Which of the segments meet at least one of the tests for reportable segments?
3. Must additional reportable segments be identified?
4. Prepare a schedule for appropriate disclosure of the above segmented data in the financial report of Rad Company for the year ended December 31, 2011.