OPERATING SEGMENTS AND RELATED PARTY DISCLOSURES
1. If a business entity entered into certain related party transactions, it would be required
to disclose all of the following information except the
a. nature of the relationship between the parties to the transactions.
b. nature of any future transactions planned between the parties and the terms
involved.
c. dollar amount of the transactions for each of the periods for which an income
statement is presented.
d. amounts due from or to related parties as of the date of each balance sheet
presented.
2. Revenue of a segment includes
a. only sales to unaffiliated customers.
b. sales to unaffiliated customers and intersegment sales.
c. sales to unaffiliated customers and interest revenue.
d. sales to unaffiliated customers and other revenue and gains.
3. An operating segment is a reportable segment if
a. its operating profit is 10% or more of the combined operating profit of profitable
segments.
b. its operating loss is 10% or more of the combined operating losses of segments
that incurred an operating loss.
c. the absolute amount of its operating profit or loss is 10% or more of the company's
combined operating profit or loss.
d. none of these.
4. A segment of a business enterprise is to be reported separately when the revenues of
the segment exceed 10 percent of the
a. total combined revenues of all segments reporting profits.
b. total revenues of all the enterprise's industry segments.
c. total export and foreign sales.
d. combined net income of all segments reporting profits.
5. All of the following information about each operating segment must be reported except
a. unusual items.
b. interest revenue.
c. cost of goods sold.
d. depreciation and amortization expense.
6. The profession requires disaggregated information in the following ways:
a. products or services.
b. geographic areas.
c. major customers.
d. all of these.
OPERATING SEGMENTS AND RELATED PARTY DISCLOSURES
7. In presenting segment information, which of the following items must be reconciled to
the entity's consolidated financial statements?
Revenues
Operating Profit (Loss)
Identifiable Assets
a.
Yes
Yes
Yes
b.
No
Yes
Yes
c.
Yes
No
Yes
d.
Yes
Yes
No
8. Reese Corp. and its divisions are engaged solely in manufacturing operations. The
following data (consistent with prior years' data) pertain to the industries in which
operations were conducted for the year ended December 31, 2008.
In its segment information for 2008, how many reportable segments does Reese have?
a.
b.
c.
d.
Three
Four
Five
Six
9. The following information pertains to Maris Corp. and its divisions for the year ended
December 31, 2008.
Sales to unaffiliated customers
$2,500,000
Intersegment sales of products similar to those sold to
unaffiliated customers
750,000
Interest earned on loans to other operating segments
50,000
Maris and all of its divisions are engaged solely in manufacturing operations. Maris has
a reportable segment if that segment's revenue exceeds
a. $330,000.
b. $325,000.
c. $255,000.
d. $250,000.
OPERATING SEGMENTS AND RELATED PARTY DISCLOSURES
10. According to Statement of Financial Accounting Standards No. 131, “Disclosures about
Segments of an Enterprise and Related Information,” how do firms identify reportable
segments?
a. By geographic regions.
b. By product lines.
c. By industry classification.
d. By designations used inside the firm.
11. Which of the following tests may be used to determine if an industry segment of an
enterprise is a reportable segment under FASB Statement No. 131?
a. Its revenue (both from external customers and internal segments) is equal to or
greater than 10 percent of total revenue (external and external).
b. The absolute value of its operating profit is equal to or greater than 10 percent of
the total of the operating profit for all segments that reported profits (or the total
of the losses for all segments that reported losses).
c. The segment contains 10 percent or more of the combined assets of all operating
segments.
d. All of the above.
12. Cosmos Corporation sells 5 different types of products. The company is divided for
internal reporting purposes into 5 different divisions based on these 5 different product
lines. The company should prepare the note disclosure for disaggregated information
based upon
a. the 5 types of products.
b. the 5 different divisions.
c. the materiality of each product line based on the revenue or operating profits
generated by each product line or the assets utilized by each product line.
d. the geographic areas in which the 5 products are sold.