Ridge Company

45. Ridge Company is in the process of determining its reportable segments for the year ended December 31, 2008. As the person responsible for determining this information, you gather the following information:

Required:
a) Using the appropriate tests, determine which of the industry segments listed above are reportable for 2008. Show your supporting computations in good form.
b) Indicate whether or not Ridge’s reportable segments satisfy the 75 percent test. Show your supporting computations in good form.

 

46. Lloyd Corporation reports the following information for 2008 for its three operating segments:

Indirect operating expenses are allocated to segments based upon the ratio of each segment’s traceable operating expenses to total traceable operating expenses. Interest expense is allocated to segments based upon the ratio of each segment’s sales to total sales.

Required:
a) Calculate the operating profit or loss for each of the segments for 2008.
b) Determine which segments are reportable, applying the operating profit or loss test.

 

47. The information below is for the second quarter of Tampa Company for 2008:

Required:
Prepare an interim income statement for the second quarter for Tampa Company. Assume the LIFO liquidation is expected to be restored by the end of 2008.

 

48. FASB 131, Disclosure about Segments of an Enterprise and Related Information, has taken what has been referred to as a “management approach” to the definition of a segment and the allocation of costs to a segment.

Required:
a) What is meant by a management approach? How does this concept of a management approach impact the decision to disclose information?
b) How are decisions about cost allocation handled in segment disclosures?

49. FASB has specified a “75% percent consolidated revenue test”.

Required:
a) What is the 75% test?
b) How is the 75% test impacted by the “10% Significance Rule”?

50. Interim income statements are required for Smith Orchards. Smith does most of its sales in the fall quarter of the year. These sales are both to individual and commercial customers. How do you recommend Smith report sales during the spring quarter of the year?

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