SEGMENT REPORTING
Problem A
Blake Company and its division are engaged solely in manufacturing operations. The following data
pertain to the industries in which operations were conducted for the year ended December 31, 2015.
Segments Total Revenue Operating Profit Identifiable Assets
A 20,000,000 3,600,000 40,000,000
B 16,000,000 2,800,000 36,000,000
C 12,000,000 2,400,000 28,000,000
D 6,000,000 1,200,000 16,000,000
E 9,000,000 1,400,000 14,000,000
F 3,000,000 600,000 6,000,000
66,000,000 12,000,000 140,000,000
In its segment information for 2014, how many reportable segments does Blake Company have?
__________ Five
Thresholds:
A. Revenue criterion: 66M x 10% = 6.6M
B. Operating Profit: 10% x 12,000,000 = 1.2M
C. Identifiable Assets: 10% x P140 M = 14M
Segment F has not met any of the criteria.
Problem B
Presented below are four segments that have been identified by Paris Company:
Segments Total Revenue Operating Profit (Loss) Identifiable Assets
A 1,500,000 200,000 6,000,000
B 4,000,000 (350,000) 6,000,000
C 1,500,000 30,000 3,000,000
D 600,000 20,000 1,500,000
7,600,000 16,500,000
For which of the segments would information have to be disclosed in accordance with IFRS 8?
__________ Segments, A, B, and C.
Thresholds:
A, revenue: 7.6M x 10% = 760,000
B. profit/loss (absolute amount): (350,000) x 10% = 35,000
C. Identifiable Assets: 16.5 M x 10% = 1,650,000
Segment D does not meet any of the thresholds.
Problem C
Uranus Company and its divisions are engaged solely in manufacturing. The following data pertain to the
industries in which operations were conducted for the year ended December 31, 2015:
Division Operating Profit/(Loss)
A 30,000,000
B 10,000,000
C (8,000,000)
D (2,000,000)
E 5,000,000
1. In its 2015 financial statements, Uranus Company should disclose an operating segment if
operating profit or loss is at least _________. 4,500,000
Profit: 45M; Loss 10M; 45M higher (in absolute amount)
45M x 10% = 4,500,000
2. Which of the divisions qualified for this threshold? __________A, B, C, E
Problem D
Bernice Company has three manufacturing divisions, each of which has been determined to be a
reportable segment. Common costs are appropriately allocated on the basis of each division’s sales in
relation to Bernice’s aggregate sales. In 2015, Division 1 had sales of P10,000,000, which was 20% of
Bernice’s total sales, and had traceable operating costs of P6,000,000. In 2015, Bernice incurred
operating costs of P1,500,000 that were not traceable to any divisions. In addition, Bernice incurred
interest expense of P500,000 I, 2015. In reporting segment information, what amount should be shown
as operating profit for Division 1 in 2015? __________ 3,700,000
10 M – 6,000,000 – 300,000 (1.5M x 20%) = 3.7M
Problem E
The following information pertains to purple company and its divisions for the year ended December 31,
2015:
Sales to unaffiliated customers 10,000,000
Inter-segment sales of products similar to those sold to
unaffiliated customers 2,000,000
Purple Company and all of its divisions are engaged solely in manufacturing operations.
Purple Company has a reportable segment if that segment’s revenue is __________.
10M + 2M = 12M x 10% = 1.2M
Problem F
Wheels Corporation, a publicly owned corporation, is subject to the requirements for segment reporting.
In its income statement for the year ended December 31, 2014, Wheels reported revenues of
P50,000,000, operating expenses of P47,000,000, and net income of P3,000,000. Operating expenses
included payroll costs of P15,000,000. Wheel’s combined identifiable assets of all industry segments at
December 31, 2014 were P40,000,000.
In its 2014 financial statements, Wheels should disclose major customer data if sales to any single
customer amount to at least _________. 5M
10% of 50M
Problem G
Which is correct concerning the 75% overall size test for operating segments? C
a. The total external and internal revenue of all reportable segments is 75% or more of the entity’s
external revenue.
b. The total external revenue of all reportable segments is 75% or more of the entity’s external and
internal revenue.
c. The total external revenue of all reportable segments is 75% or more of the entity’s external
revenue.
d. The total internal revenue of all reportable segments is 75% or more of the entity’s internal
revenue.
Problem H
A chemical entity has no overseas sales. The entity produces different products from the process. The
entity sells its products to small businesses, larger national businesses and multinational entities. The
management of the entity proposed to disclose just one business segment. Can the entity disclose just
one business segment because it sells all of its products nationally? B
a. Yes, the Standard will allow the entity to disclose a single business segment.
b. No, the entity can identify three different sets of customers and should therefore disclose
information on that basis.
c. Yes, even though there are three different groups of customers, they all present the same risks to
the entity.
d. IFRS 8 is silent on this matter.
