Assignment No.

2020-10-06

Name: Alliah Bea M. Ladao Score:

Subject: Intermediate Accounting 3 Date: Oct. 28,2020

I. Short Problems.​ Write your answer on the space provided.

Show your solution.

1.​ ​Iting Co. and its division are engaged solely in manufacturing
operations. The following data pertain to the industries in
which operations were conducted for the current year:

Industry Revenue Profit Assets

A 10,000,000 1,750,000 20,000,000

B 8,000,000 1,400,000 17,500,000

C 6,000,000 1,200,000 12,500,000

D 3,000,000 550,000 7,500,000

E 4,250,000 675,000 7,000,000

F ​1,500,000 ​225,000 3,000,000

32,750,000 5,800,000 67,500,000

How many reportable segments does Iting have? ​5 Reportable

Segments
ANSWERS:

Based on Revenue:

Industry A, B, C and E are reportable segments. ​(4 reportable

segments)

Based on Profit:

Industry A, B, C and E are reportable segments. ​(4 reportable

segments)

Based on Assets:

Industry A, B, C, D and E are reportable segments. ​(5 reportable

segments)

SOLUTIONS:

Revenue: Profit: Assets:

3,275,000 5,800,000 67,500,000

× 10% × 10% × 10%

3,275,000 580,000 6,750,000

2.​ ​Matulin Co. and its divisions are engaged solely in

manufacturing. The following data pertain to the industries in
which operations were conducted for the current year:
Segment profit (loss)

V 3,400,000

W 1,000,000

X (2,000,000)

Y 400,000
 Z (200,000)

2,600,000

In the segment information for the current year, what are the
reportable segments?

ANSWERS:

Only industry V, W and X are reportable segments.

SOLUTIONS:

Profit Loss

V 3,400,000

W 1,000,000

X 2,000,000

Y 400,000

Z 200,000

4,800,000 2,200,000

4,800,000

× 10%

480,000
3.​ ​The following information pertains to Pajo Co. and its
divisions for the current year:

Sales to unaffiliated customers 20,000,000

Intersegment sales of products similar to those

Sold to unaffiliated customers 6,000,000

Interest earned on loans to other operating

Segments 400,000

Pajo and all divisions are engaged solely in manufacturing

operations. What is the minimum amount of segment revenue in
order that a division can be considered a reportable segment

ANSWERS:

The minimum amount of segment revenue is 2,600,000

SOLUTIONS:

Sales to unaffiliated customers 20,000,000

Intersegments sales ​6,000,000

COMBINED REVENUE 26,000,000

Total of reportable segments:

26,000,000

× 10%
2,600,000
4.​ ​Prejoles Co., a publicly owned entity, is subject to the
requirements of segment reporting. In the income statement for
the year ended December 31, 2020, the entity reported revenue
of P50,000,000, excluding intersegment sales of P10,000,000,
expenses of P47,000,000 and net income of P3,000,000. Expenses
included payroll costs of P15,000,000. The combined
identifiable assets of all operating segments on December 31,
2020, totalled P40,000,000.

A. In the financial statements, the entity should disclose major

customer data if sales to any single customer amount to at least

ANSWER:​ ​P5,000,000

SOLUTION:

P5,0000,000

× 10%

P5,000,000

B. External revenue of reportable segments must be at least

ANSWER: ​P37,500,000

SOLUTION:

50,000,000

x .75

P37,500,000

5.​ ​Quevedo Co. discloses supplemental operating segment

information. The following information is available for the
current year:
Segment Sales Traceable expenses

X 5,000,000 3,000,000

Y 4,000,000 2,500,000

Z 3,000,000 1,500,000

12,000,000 7,000,000

Additional expenses are as follows:

Indirect expenses 1,800,000

General corporate expenses 1,200,000

Interest expenses 600,000

Income tax expense 400,000

The interest expense and income tax expense are regularly

reviewed by the chief operating decision-maker as a measure of
profit or loss. Appropriate common expenses are allocated to
segments based on the ratio of a segment’s sales to total sales.
What is Segment Z’s profit for the current year?

ANSWER:

P500,000

SOLUTION:

Revenue P 3,000,000

Expenses (1,500,000)

Indirect (450,000)

General (300,000)
Interest (150,000)

Income Tax (100,000)

Operating Profit P 500,000

Ratio: 25%(3,000,000/12,000,000)

6.​ ​Roquete Co. operates in several different industries. Total

sales for Roquete Co. totalled P14,000,000, and total common
costs amounted to P6,500,000 for the current year. For
internal reporting purposes, Roquete Co. allocated common
costs based on the ratio of a segment’s sales to total sales.
Additional information regarding the different segments
follows:

Contribution to total sales Cost specific in the segment

Segment 1 25% 1,100,000

2 12% 1,000,000

3 31% 1,300,000

4 23% 880,000

5 9% 400,000

What is the profit of Segment 1? ____________

ANSWER:

P775,000

SOLUTION:

Sales (14,000,000x25%) P3,500,000

Expenses (1,100,000)

Common Costs (1,625,000)

Operating profit P775,000

7.​ ​Sotto Co. provided the following data for the current year:

Sales 60,000,000

Cost of goods sold 28,000,000

Expenses 14,000,000

Depreciation 4,000,000

Income tax expense 4,000,000

The entity has two major reportable segments, X and Y. An

analysis revealed that P1,000,000 of the total depreciation
expense and P2,000,000 of the expenses are related to general
corporate activities. The remaining expenses and sales are
directly allocable to segment activities according to the
following percentages:

Segment X Segment Y Others

Sales 40% 45% 15%

Cost of goods sold 35 50 15

Expenses 40 40 20

Depreciation 40 45 15

What amount should be reported as a profit of Segment X?

ANSWER:
P100,000 is the amount to be reported as a profit of Segment X

SOLUTION:

Segment X Segment Y Others Total Sales

SALES P 24,000,000 27,000,000 9,000,000 60,000,000

COGS (9,800,000) (14,000,000) (4,200,000) (28,000,000)

Gross Profit 14,200,000 13,000,000 4,800,000 32,000,000

Expenses (4,800,000) (4,800,000) (2,400,000) (12,000,000)

Depreciation (1,200,000) (1,350,000) (450,000) (3,000,000)
Income Tax (2,000,000) (1,600,000) (400,000) (4,000,000)

Profit/ Loss P 6,200,000 5,250,000 1,550,000 13,000,000

Disclosure – Sotto Company

Segment A Segment Y Others Total

Sales 24,000,000 27,000,000 9,000,000 60,000,000

Profit/Loss 6,200,000 5,250,000 1,550,000 13,000,000

Depreciation 1,200,000 1,350,000 450,000 3,000,000

Reconciliations

Revenue from reportable segments P 51,000,000

Revenue from non-reportable segments 9,000,000

Entity’s revenue shown in Income Statement P 60,000,000

Profit from reportable segments P 11,450,000

Profit from non-reportable segments 1,550,000

Unallocated Depreciation (1,000,000)

General Corporate expenses (2,000,000)

Entity’s profit shown in Income Statement P 10,000,000

II.​ ​Identification. ​On the space provided, write the correct

answer.

PFRS 8 ​1.​ Sets out the requirements for disclosure of

information about operating segment.
Operating Segment ​2.​ Is a component of an entity that
engages in business activities from which it may earn
revenue and incur expenses, including revenue and
expenses relating to transactions with other components
of the same entity.
Chief Operating Decision Maker ​3.​ Is responsible for the
allocation of resources and assessing the performance of
operating segments.
​Management Approach 4​.​ An approach used in identifying
operating segments.
​Major Customer 5​. ​Is defined as a single external
customer providing revenue which amounts to 10% or more
of an entity’s external revenue.

Lvts20