F2 M5 Segment Reporting

Question 1

IFRS or GAAP:

Requires the disclosure of segment liabilities

Answer 1

IFRS

Question 2

What are the 3 characteristics of an operating segment/component?

Answer 2

It engages in business activities from which it earns revenue and incurs expenses,
Its operating results are regularly reviewed by the entity’s chief operating decision maker,
Its discrete financial statements are available (traceable cash flows)

Question 3

What 2 components are not operating segments?

Answer 3

Corporate headquarters

Pension plan

Question 4

If one segment is greater than 90% then _____.

Answer 4

No segment reporting is needed

Question 5

If a segment is greater than 10% off these 3 areas then you must report that segment.

Answer 5

Revenue
Operating profit
Assets

Question 6

What is the calculation for the segment profit?

Answer 6

Revenues
Less: directly traceable costs for that segment, both external and internal
Less: reasonably allocated costs by management (CODM chief operating decision maker)
Operating profit or loss (earnings before income tax)

Question 7

What info should a public company present about revenues from reporting segments?
A. No disclosure of revenues from foreign operations need be reported
B. Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales
C. Disclose separately the amount of sales to unaffiliated customers but not the amount of intracompany sales between geographic areas
D. Disclose as a combined amount the sales to unaffiliated customers and intracompany sales between geographic areas

Answer 7

B

Question 8

In financial reporting of segment data, which of the following items is always used in determining a segment’s operating income?
A. General corporate expense
B. Income tax expense
C. Sales to other segments
D. Gain or loss on discontinued operations

Answer 8

C

Question 9

In order to conform to GAAP, financial statements for public business enterprises must report segment information about a company’s major customers if that customer provides __% or more of the combined revenue, internal and external, of ______.

Answer 9

10%

All segments

Question 10

Aria Corp and its divisions for the year ended Dec 31
Sales to unaffiliated customers $2,000,000
Intersegment sales of products similar to those sold to unaffiliated customers $600,000
Interest earned on loans to other industry segments $40,000
Aria and all of its divisions are engaged solely in manufacturing operations. Aria has a reportable segment if that segment’s revenue exceeds:
A. $204,000
B. $260,000
C. $264,000
D. $200,000

Answer 10

B

10% of $2,600,000

Question 11

Under IFRS, which of the following is NOT disclosed for an entity's reportable segments?
A. Segment assets
B. Segment cash flow
C. Segment profit or loss
D. Segment liabilities

Answer 11

B