—, cag Excel Professional Services, Inc. "06 Management Firm of Professional Review and Training Center ( RC) eR 21 ra 73503» Saas Cy aPC S| SY Sts ha a (aaeereasaty GRATES SUE SET ny cons aascias | S ” OCAMPO/CABARLES/SOLIMAN/OCAMPO Fan Segments CPA REVIEW MAY 2019, FAR,2644-Operal DISCUSSION PROBLEMS 1, PERS 8 applies to the separate or Individual financial statements of an entity Whose equity instruments are traded in a domestic market. Whose debt instruments are traded In an over-the- counter market. Whose equity Instruments stock exchange merket. Allof the above y fe traded In a foreign Which statement Is correct regarding reporting of ‘segment Information in accordance with PFRS 8? a. PFRS 8 requires that an entity should disclose information to enable users of its finencial statements to evaluate the nature and financial effects of the types of business activities in which It engages and, the economic environments In which operates. yancipe if an entity that If nt required to apply PFRS 8 chooses ta disclose Information about segments that does not comply with PFRS 8, It shall not ‘describe the Information es segment Information. Both a anc b, Netther a nor b. operating segment is a companent of an entity: “That engages in business activities from which It mey earn revenues end incur expenses (Including revenues and expenses relating to transactions \with other components of the same entity). Whose operating results are reviewed regularly by the entity's chief operating decision maker to make decisions about resources to be alloceted to th ‘segment and assess its performance. For whien discrete financial Information avallable. All of the above. is a ‘The method used to determine what information to report for operating segments is referred to as the ‘a, Segment approach «Enterprise approach b. Operating approach d._ Management approach of ‘Which statement Is Incorrect regarding the term “chief operating decision maker (CODM)"? a, The term Identifies a function, not necessarily a manager with 2 specific tte, “The function of the CODH is to allocate resources: to and assess the performance of ‘the operating ‘segments of an entity. Often the CODM of an entity Is Its chief executive officer or chief operating officer but, for example, tt ‘may be & group of executive directors or others. None of the above. b a. paler, lineys SermeeeyTformtoniant ay ing segment thet meets which of the followi quantitative thresholds? oe 2. Its reported revenue, including both seles to ‘external customers and intersegment sales or transfers, ie 10 per cent or more of the combined as An Revenue ‘Segment profit Assets: 7 oft oF Iss s me absolute amount of reported prof The absolute ammore of the grester, In absoie 20 per, cent rane earned reported profit of a emourt of (ents nat did nok report 2 loss and operating oeened reported loss of all operating {i the era reported «loss Pl ie assets are 10 per cent or more of the combined Re miso ol operating segments. Ai fay ot eese b. & oe ie Soran! Cane pe wee elaine we utero: al i ts ea ts Ao She roe Wags S70 en Dept. atl Liquor Toy stores Pioom PSSOM 15M ™ 4M 26M 900M 200M 100M = 1,200" In its segment information, how many reportable segments does the company have? a. Three b, Two stores stores: 400m SOM «One d, None Celine Corporation and its divisions arc engaged solely in manufacturing. The following data pertain to the Industries In which operations were conducted for the caren eat m hece Bute] ‘Operating Profit (Loss) Division A 30,000,000 5 40,000,000 c (8,000,000) D € 2,000,000) e 5,000,000 In ts current year financial statements, Celine Corporation should disclose an operating segment if ‘operating profit of loss is at least ‘a. 1,000,000. ‘ & b. 3,500,000 a. 4,500,000 P5,500,000. Rainee Corporation's revenue for the Ramee Con : e current year were Consolidated revenue per income: P tae 4,200,000 Intersegment sales 1 Intersegment transfers eal Combined revenues of all operating rrr Pu.420,000 Rainee has @ reportable ment if th coment revenues atleast Se revenue, intemal and external, of all operating 144,000 Segments, fuinet b. 120,000 & P e00 Page 1 OFA wc ores 00% = www. prtc.com.ph ma “AR.2644eee NC. —$——————— et none 1p 10. PFRS 8 defines 3. Segment revenu e >. Segment expense © Segment resuit None of these The following info maton pera "Rvislons forte arent yean © NOME CoD. and Sales to unaffiliats : ted customers, Intersegment sales, ‘Of products similar aa to tose sed unanned vniiener 500,000 {Med on tans o other Operating segments eee, Nolte and all of its divisi ions are engaged solely in ‘manufacturing operations, Nolte has 2 reportable Segment if that segment's revenue 's at lenst. a.” 264,000 c. P260,000 204,000 d. 200,000 Use the following information for the next four questions. Grum Corp. a publicly owned corporation, is subject to the requirements for segment reporting. In its income statement for the current year, Grum reported revenues of 'P50,000,000, operating expenses of P47,000,000, and net Income of P3,000,000, Operating expenses include payroll ‘costs of P15,000.000. Grum's combined identifiable assets of all industry segments at the end of the current year were — P40,000,009. Reported revenues include 30,000,000 of sales to external customers. 12. n Its current year financial statements, Grum should Clsciose major customer date If seles to any single customer amount to at least 2. P_ 300,000 4,000,000 5. 3,000,000 5,000,000 D 13. 1f revenues from transactions with a single external ‘customer amount to 10 per cent or mare of an entity's revenues, the entity need not disciase 2. That fact. b. The total amount of revenues from each such customer. “The Identity of the segment or segments reporting the revenues. 4. “The amount of revenues that each segment reports from a major customer. ct ”\ 14, External revenue reported by operating segments must beat least Nhs onc 2. 22,500,000 , P15,000,000 . P12,500,000 d. 57,500,000 1D 15. What should the entity do if the total external revenue reported by operating segments constitutes less than 75 per cent of the entity's revenue? 4. Additional operating segments must be identified as reportable segments. ‘Additional operating segments must be Identified 25 reportable segments even if they do not meet the quantitative thresholds, ©. Additional operating segments must be identified 6 as reportable segments until at least 75 per cent of ¢ 2¢ the entity's revenue Is Included In reportable segments, d. Allof the above. 4 16, Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of PERS 8 the segments have similar economic characteristics, and the segments are similar in each of the following, respects: paz. pie. Bas. 0. 1, The nature of the products and servic Fi ae gaae of customer for telr products The metsods used to distribute their procucts oF Fheinoture of the regulatory. endronme Grampa, banking, Insurance oF pubic Ue Vv, for 1,11, Ih IV and 1,1, HE, and IV only 1 hand v only and V only 1 equty of The Kslaho Company 's traded on 2 Tpnied stor exchange, _Kelaho repulery, reports The funcll resuts of fve efterent busines units (0s thie operating decison macer, The relevant revenues for toe coment year for these five operations, a5 Ferceneage of tl external and intemal revenuc, Were ts folowe Business epsration — % Internal 1 3 35 38 2 10 rts 24 3 45 5 20 4 ° 9 3 5 0 9 9 28 R 100 The reportable segments of Kaiaho are 3. and 2 only €. 4,2,3 and 4 only b. 4,2end 3 only d 1,2/3,4 and 5 ‘The following segments have been identified for 2 business, along with their sales, No segment qualifies ‘on any other criterion for determining reportable segments except possibly for revenue. Sales for each segment, and the total for the corppany follow: “Seoment Sales Tom a tac + al = 7 500,000 seymurd Iu 2 200,000 “Ye"Jang = 90 3 200,000 hg 94 an -4 800,000 rBpatigm set 5 150,000 6 200,000 7 _478.090 F225,000 (total company sales) ee What is the minimum number of reportable segments for this company? a5 ce) bi 4 d. 2 ‘There may be a practical limit to the number of reportable segments that an entity separately discloses beyond which segment information may become too detalled. What did the IASB decide was a reasonable Lupper limit for the number of segment that a company must disclose? a. Five b. Ten c Twelve d. Fifteen . Taft Corp. discloses operating-segment information. ‘The following Information is avallable for the current year: Page 2 of 4 Wwww.pric.com.ph Operating Traceable Seament Sales Operating Expenses A 1,000,000 P 600,000 B 800,000 500,000 c 600,000 350,000 £2.400,000 P1,450,000 FAR.2644 Hye 4y EXCEL PROFESSIONAL SERVICES, INC a Adétionl Curent year expe ora we i et inchided shove, 21. norte Company has three manufacturing Gvsions. Indirect operating expenses tect of einen hes been Setermined to be 8 reporatee Generai corporate 360,000 Stpmena’” Common costs are appropriately wiocated nee cise 240,000 rv the basis of auch dhasuon’s sales i relation to mgseure of segment Norte’ wopregota snies. in the current year, Ov the chief Prot OF 18s reviewed by sees wren Norte’s the Get sperstng cacan make, sppprers aS ata case ‘wes 20% of ‘les, and hed vacerbie opersung costs of 00,000. Norte Incurred operating costs of 1. Austrata Company hes three business segments with 4. The following segments nave been identified for an the fotewing Intormancn entay, slong with thelr sales. No segment quafifies on fo “iP Sty Sher ottara tor determining reportable segments. ‘Sales to outsiders P8,000,000 niente Sales for each segment and the total for the entity “woe 00 1,000, Seater ntarsegrant outeicers e as ea 1 710,000,000, P 3,000,000 913,000,000 490,000 500,000 400,000 900) 006 Interest income - 2 2,000,000 1,$00,000 3,500,000 Teesegremiens 300,000 400000 $0000 «=? 2800000 © 410,009 3 Fae ME decease 2: Senay mee Seam those mutt have te be considered 6 ¥.000,000 700,000 3,700,000 a riye80,000 ee 7 sagging = _..ag0.0g0 5.800.000 & px i00.e00 ae Ganon.oen © aonmone a.c00.000 nats the minimum number of reportable segments 2. In preparing its segment-reporting schedule, the Hign (9° UNE antty? Corporeton Pas ceveoped the folowing information & 2 os a6 i i FE eae Gh Heda [ atl Bundle a i sliaill eegeashes lj i eae t 8 s sore