Chapter 13 – Segment and Interim Reporting
C13-9 Questions about Interim Reporting
1. An income statement for the third quarter.
2. A comparative income statement for the third quarter of the prior year.
3. An income statement for the cumulative first three quarters of the current year.
4. A comparative cumulative income statement for the first three quarters of the
prior year.
b. ASC 250 requires that a change in depreciation method be accounted for as a change in
accounting estimate affected by a change in accounting principle. The current and
prospective application is used and prior financial statements are not restated. Thus, the
detail of information required in the interim report is less than that required in the annual
report.
f. Publicly owned companies classified as accelerated filers must file their 10-Q within 35
days after the end of each of their first three quarters. Companies not meeting the
criteria of accelerated files must file within 45 days after the end of each of their first
three quarters.
i. Many companies allocate costs incurred in a quarter that benefit the entire year. A
common example of this are the costs associated with retooling efforts during the short
period the company is shut down each year for retooling to take place. Several allocation
methods are allowed such as allocating a fourth of the retooling cost to each quarter or
relating the retooling cost to proportional sales revenue during the year. The key point to
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Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized
for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted
on a website in whole or part.
E13-1 Reportable Segments
a.
Segment
Revenuea
Profit (loss)b
Assetsc
Electronics
No
No
No
Bicycles
Yes
Yes
Yes
Sporting Goods
No
No
No
Home Appliances
Yes
Yes
Yes
Gas and Oil
Yes
Yes
Yes
Glassware
No
Yes
No
Hardware
Yes
Yes
Yes
a Segment revenue greater than $77,500 ($775,000 x 0.10)
b Segment profit or loss greater than $10,370
($103,700 total profit, excluding loss segments x 0.10)
c Segment assets greater than $118,500 ($1,185,000 x 0.10)
All segments but Electronics and Sporting Goods are separately reportable.
b.
The 75 percent test is applied to revenue from unaffiliated customers.
Revenue from unaffiliated customers
of reportable segments
= $655,000*
= 87.3%
Total revenue from unaffiliated customers
$750,000
Yes, the 75 percent test is met.
