CHAPTER 9

INTERIM REPORTING AND OPERATING SEGMENTS

9-1

Angel Company
Angel Company
Statement of Comprehensive Income
For the Quarter Ended September 30, 2012
Net sales (30% x 9,000,000)
Cost of goods sold
Gross profit (38% x 2,700,000)
Operating expenses *
Gain on sale of equipment
Profit from Continuing Operations
Income Tax
Net profit (loss)

P
P

P
P

*Operating Expenses:
Variable = 30% x 600,000
Fixed = (960,000 600,000) /4
Total
9-2

2,700,000
1,674,000
1,026,000
(270,000)
280,000
1,036,000
310,800
(725,200)

P180,000
90,000
P270,000

Galaxy Company
Galaxy Company
Statement of Comprehensive Income
For the Month of October 2012
Net sales
Cost of goods sold:
Merchandise Inventory, October 1
Purchases
Total goods available for sale
Merchandise inventory, October 31
Cost of sales
Gross profit
Selling expenses
General and administrative expenses
Net profit

9-3

239,100

280,000
215,000
495,000
372,600
122,400
116,700
(54,700)
(19,000)
43,000

P
P

Blue Bay
Minimum required assets
Minimum required revenue
Minimum required operating result (profit or loss)

P5,000,000
8,600,000
2,000,000

Reportable segments are A, B, C, D and E. The 75% test has also been met.
9-4

Minimum operating result (profit or loss)

Reportable segments based on the above test are B, D and E.

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P1,100,000

Chapter 9 Interim Reporting and Operating Segments

9-5

Red Company
Minimum required revenues
Minimum required operating profit
Minimum required identifiable assets

P3,275,000
580,000
6,800,000

Identified reportable segments, based on any of the above tests: A, B, C, D and E

9-6

Oliver Company
Revenue (40% x 7,500,000)
Traceable costs
Allocated common costs (1,250,000/2,500,000) x 1,500,000)
Profit Segment 1

P3,000,000
(1,750,000)
( 750,000)
P 500,000

Multiple Choice
Interim Reporting
MC1
MC2
MC3
MC4
MC5
MC6
MC7
MC8
MC9
MC10
MC11
MC12
MC13
MC14

A
D
B
B
A
B
B
C
B
A
B
B
C
A

MC15
MC16
MC17
MC18
MC19
MC20

C
A
D
A
D
A

MC21
MC22
MC23
MC24
MC25
MC26
MC27
MC28
MC29

A
C
B
C
B
A
D
C
D

320,000 X = 80,000
End of January = 200,000 + 50,000 192,000 = 58,000
End of February = 58,000 + 380,000 408,000 = 30,000
End of March = 30,000 + 704,000 604,000 = 130,000
(600,000 x ) + (1,200,000 x ) = 900,000

(25,000,000 X 10%) (10,000,000 X 5%) = 2,000,000

(45,000,000 X 10%) (20,000,000 X 5%) = 3,500,000
100,000 x 12 = 1,200,000, which is lower than the cost of P1,400,000
Operating Segments

10% (1,000,000 + 300,000)

500,000 225,000 (240,000 X 500,000/1,500,000)

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Chapter 9 Interim Reporting and Operating Segments

MC30
MC31
MC32
MC 33

A
C
B
B

2,000,000 900,000 (3,000,000 X 2M/10M)

10% (153,000,000 140,000,000)
4,000,000 2,200,000 (1,200,000 X 1,800,000/3,000,000)=1,080,000

54