2P_a_3 Cineplex Corporation is a divers... [FREE SOLUTION]

Chapter 24: 2P_a_3 (page 1450)

Cineplex Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2018.
A
B
C
D
E
Sales revenue
$40,000
$75,000
$580,000
$35,000
$55,000
Cost of goods sold
19,000
50,000
270,000
19,000
30,000
Operating expenses
10,000
40,000
235,000
12,000
18,000
Total expenses
29,000
90,000
505,000
31,000
48,000
Operating profit (loss)
$11,000
$(15,000)
$75,000
$4,000
$7,000
Identifiable assets
$35,000
$80,000
$500,000
$65,000
$50,000
Sales of segments B and C included intersegment sales of $20,000 and $100,000, respectively.
Instructions
(a) Determine which of the segments are reportable based on the:
3) Identifiable assets test.

Short Answer

Expert verified

Segments B and C are reportable.

Step by step solution

Meaning of Identifiable asset

An identified asset is any asset that has an economic value and may be utilized to generate profits in the future. Simply, identifiable assets are the assets of a corporation whose worth can be assessed. When a firm intends to combine with another company, identifiable assets are crucial.

Determining the segments that are reportable

Identifiable Asset test is $73,000

Working Notes:

$\begin{array}{rcl} Identfiable asset test & = & Total identifiable asset 脳 rate \\ = & ($ 35, 000 + $ 80, 000 + $ 500, 000 + $ 65, 000 + $ 50, 000) 脳 10 % \\ = & $ 730, 000 脳 10 % \\ = & $ 73, 000 \end{array}$

Segment B ($80,000) and C ($500,000) are meet this test

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GILMOUR COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2018 AND 2017
December 31
	2018	2017
Assets
Cash	\( 180,000	\) 275,000
Accounts receivable (net)	220,000	155,000
Short-term investments	270,000	150,000
Inventories	1,060,000	980,000
Prepaid expenses	25,000	25,000
Plant & equipment	2,585,000	1,950,000
Accumulated depreciation	(1,000,000)	(750,000)
	\(3,340,000	(2,785,000)

Liabilities and Stockholders鈥� Equity
Accounts payable	\) 50,000	\( 75,000
Accrued expenses	170,000	200,000
Bonds payable	450,000	190,000
Common stock	2,100,000	1,770,000
Retained earnings	570,000	550,000
	\)3,340,000	(2,785,000)

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Short Answer

Step by step solution

Meaning of Identifiable asset

Determining the segments that are reportable

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	A	B	C	D	E
Sales revenue	\(40,000	\)75,000	\(580,000	\)35,000	\(55,000
Cost of goods sold	19,000	50,000	270,000	19,000	30,000
Operating expenses	10,000	40,000	235,000	12,000	18,000
Total expenses	29,000	90,000	505,000	31,000	48,000
Operating profit (loss)	\)11,000	\((15,000)	\)75,000	\(4,000	\)7,000
Identifiable assets	\(35,000	\)80,000	\(500,000	\)65,000	\(50,000