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Intermediate Accounting (Kieso)
Found in: Page 1450

Short Answer

Cineplex Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2018.

A

B

C

D

E

Sales revenue

$40,000

$75,000

$580,000

$35,000

$55,000

Cost of goods sold

19,000

50,000

270,000

19,000

30,000

Operating expenses

10,000

40,000

235,000

12,000

18,000

Total expenses

29,000

90,000

505,000

31,000

48,000

Operating profit (loss)

$11,000

$(15,000)

$75,000

$4,000

$7,000

Identifiable assets

$35,000

$80,000

$500,000

$65,000

$50,000

Sales of segments B and C included intersegment sales of $20,000 and $100,000, respectively.

Instructions

(a) Determine which of the segments are reportable based on the:

  1. Revenue test.

Segment C is reportable.

See the step by step solution

Step by Step Solution

Meaning of Revenue

Revenue is the profit a firm makes from its operations. Product sales, consultancy fees, other services, rent, and even commission-based fees are all examples of income sources.

Determining the segments that are reportable

The revenue test is computed as $78,500.

Working Notes:

Only Segment C ($580,000) meet this test.

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