Problem 10-15

Required:
1. Prepare the necessary disclosures for Diversity Company in relation to
operating
segments.

Disclosure of profit or loss and assets

. Segment A Segment B Others Total

Sales 25,000,000 15,000,000 5,000,000 45,000,000
Profit or loss 7,000,000 6,000,000 1,000,000 14,000,000
Total assets 35,000,000 18,000,000 7,000,000 60,000,000

2. Prepare the reconciliations between segment information and the amount

shown in the
entity’s financial statements.
Reconciliation

Revenue
Revenue of reportable segments 40,000,000
Revenue of nonreportable segments 5,000,000
Entity revenue shown in income statement 45,000,000

Profit and loss

Profit or loss of reportable segments 13,000,000
Profit or loss of nonreportable segments 1,000,000
Corporate expenses (2,000,000)
Unallocated income tax expense (3,800,000)
Entity net income shown in income statement 8,200,000

Total assets
Total assets of reportable segments 53,000,000
Total assets of nonreportable segments 7,000,000
General corporate assets 5,000,000
Entity total assets shown in statement of financial position 65,000,000
Problem 10-16

Required:

1. Prepare a schedule that reports the segment profit or loss.

Segment X Segment Y Others Total

Sales 24,000 27,000 9,000 60,000
Cost of goods sold ( 9,800) (14,000) (4,200) (28,000)
Gross income 14,200 13,000 4,800 32,000
Segment expenses ( 4,800) ( 4,800) (2,400) (12,000)
Depreciation ( 1,200) ( 1,350) ( 450) ( 3,000)
Income tax expense ( 2,000) ( 1,600) ( 400) ( 4,000)
Segment profit or loss 6,200 5,250 1,550 13,000

2. Prepare the disclosures that required for operating segments.

Disclosure of segment profit or loss

Segment X Segment Y Others Total
Sales 24,000 27,000 9,000 60,000
Profit or loss 6,200 5,250 1,550 13,000
Depreciation 1,200 1,350 450 3,000

3. Prepare the reconciliations between segment information and amounts shown in the entity’s
financial statement.

Reconciliation

Revenue
Revenue of reportable segments 51,000,000
Revenue of nonreportable segments 9,000,000
Entity revenue shown in income statement 60,000,000

Profit and loss

Profit or loss of reportable segments 11,450,000
Profit or loss of nonreportable segments 1,550,000
Unallocated depreciation ( 1,000,000)
General corporate expenses ( 2,000,000)
Entity net income shown in income statement 10,000,000
Problem 10-17

Required:

1. Determine the segment profit for all of the operating segments.

Furniture Stationery Computer Others Total

External sales 800,000 500,000 400,000 100,000 1,800,000
Intersegment sales 200,000 150,000 50,000 - 400,000
Total revenue 1,000,000 650,000 450,000 100,000 2,200,000
Cost of sales -external (600,000) (300,000) (240,000) (60,000) (1,200,000)
Cost of sales -internal (120,000) (96,000) (24,000) - (240,000)
Gross profit 280,000 254,000 186,000 40,000 760,000
Distribution cost (100,000) (50,000) (40,000) (10,000) (200,000)
Administrative expense (50,000) (25,000) (20,000) (5,000) (100,000)
Finance cost (30,000) (15,000) (12,000) (3,000) (60,000)
Segment profit or loss 100,000 164,000 114,000 22,000 400,000

2. Prepare disclosures required for operating segments.

Furniture Stationery Computer Others Total

External sales 800,000 500,000 400,000 100,000 1,800,000
Intersegment sales 200,000 150,000 50,000 - 400,000
Profit or loss 100,000 164,000 114,000 22,000 400,000
Finance cost 30,000 15,000 12,000 3,000 60,000
Total assets 440,000 170,000 100,000 5,000 715,000
Total liabilities 75,000 50,000 15,000 3,000 143,000

3. Prepare the necessary reconciliations between the segment information and amounts shown
in the entity’s financial statements.

Reconciliation

Revenue
Sales of reportable segments 2,100,000
Sales of nonreportable segments 100,000
Elimination of intersegment sales ( 400,000)
Entity sale in income statement 1,800,000

Profit and loss

Profit or loss of reportable segments 378,000
Profit or loss of nonreportable segments 22,000
Elimination of intersegment profit (160,000)
Share in profit of associate 10,000
Unallocated items:
Other income 60,000
Other expenses (50,000)
Income tax expense (90,000)
Entity net income in income statement 170,000

Intersegment sales 400,000

Cost of sales – intersegment sales (240,000)
Intersegment gross profit 160,000

Total assets
Total assets of reportable segments 710,000
Total assets of nonreportable segments 5,000
Investment in associate 70,000
General corporate assets 15,000
Entity total assets 800,000

Total liabilities
Total liabilities of reportable segments 140,000
Total liabilities of nonreportable segments 3,000
General corporate liabilities 7,000
Entity total liabilities 150,000
Problem 10-18

Required:

1. Determine the reportable segments without regards to aggregation criteria.

Segments Revenue Profit (loss) Assets

1 620,000 200,000 400,000
2 100,000 20,000 80,000
3 340,000 70,000 300,000
4 190,000 ( 30,000) 140,000
5 180,000 ( 25,000) 180,000
6 70,000 10,000 120,000
7 120,000 ( 20,000) 140,000
Others 380,000 ( 25,000) 140,000
Total 2,000,000 200,000 1,500,000

The reportable segments are determined based on their revenue, identifiable assets, and
operating profit or loss. Any segment with revenue equal to or greater than P200,000,
identifiable assets greater than P150,000, or operating profit or loss equal to or greater than
P30,000 is considered a reportable segment. Based on these criteria, segments 1, 3, 4, and 5 are
reportable segments.

2. If the 75% overall size test for reportable segments is not yet met, identify additional reportable
segments.

Segment
1 620,000
3 340,000
4 190,000
5 180,000
Total revenue 1,330,000

Percentage (1,330,000 / 2,000,000)

If a company's total revenue from its reportable segments is less than 75% of its total revenue, it
must identify additional segments. Even segments below the 10% revenue threshold can be
combined as one segment if they share a majority of the five factors used to identify a business
segment, including the nature of the product, production process, class of customer, method of
distributing the product, and regulated environment.

Since segments 6 and 7 are similar in four of the five criteria, they can be
aggregated as one reportable segment.
 Segment 6 Segment 7 Total
Revenue 70,000 120,000 190,000
Profit (loss) 10,000 ( 20,000) ( 10,000)
Segment assets 120,000 140,000 260,000

With segments 6 and 7 considered as one reportable segment, the total segment
revenue increases to P1,520,000 or 76% of the total. The 75% requirement has
been met.

Revenue of reportable segments before aggregation 1,330,000

Revenue of additional reportable segments 190,000
Total 1,520,000

Percentage (1,520,000 / 2,000,000) 76%

3. What are the reportable segments after considering all factors?

In conclusion, Segments 1, 3, 4, 5, and Segments 6 and 7 (combined) shall be considered reportable

segments.
Problem 10-19

Required:

1. Universal Company had structured its operations internally into two divisions based on two
products, A and B.
Prepare the disclosures required in relation to operating segments.

Product A Product B Total

Revenue 2,500,000 6,000,000 8,500,000
Segment profit or loss 650,000 700,000 1,350,000
Depreciation 350,000 1,300,000 1,650,000
Total assets 2,600,000 10,000,00 12,600,00
0 0
Total liabilities 1,300,000 6,000,000 7,300,000
Capital expenditures 600,000 1,300,000 1,900,000

2. Prepare the entity-wide disclosure about geographical areas to conform with the requirement
of segment reporting.

Philippines Japan Total

Revenue 5,000,000 3,500,000 8,500,000
Noncurrent assets - PPE 3,000,000 2,100,000 5,100,000