Rollins Company

17. Five of eight internally reported operating segments of Rollins Company qualify under the standards set by FASB 131 for segment reporting. However, the five identified segments do not meet the 75 percent revenue test. FASB 131 prescribes that management:
A. subdivide segments until there are at least 10 reportable segments.
B. consolidate the remaining operating segments and include them under an “all other” category.
C. select additional operating segments until the 75% threshold is met.
D. include the heading “corporate headquarters” as an operating segment.

18. Derby Company pays its executives a bonus of 6 percent of income before deducting the bonus and income taxes. For the quarter ended March 31, 2008, Derby had income before the bonus and income tax of $12,000,000. For the year ended December 31, 2008, Derby estimates that its income before bonus and income taxes will be $70,000,000. For the quarter ended March 31, 2008, what is the amount of the bonus that Derby should deduct on its income statement?
A. $4,200,000
B. $720,000
C. $1,050,000
D. $180,000

 

19. In 2006 and 2007, each of Putney Company’s four operating segments met one of the three quantitative tests for segment reporting. In 2008, Segment B failed to qualify under the prescribed tests because of abnormal financial conditions. The other three segments qualified for reporting. For 2008, Segment B:
A. should be excluded from segment disclosure but referred to in the management letter to shareholders.
B. should be distinctly separated from the other three segments and listed as a “nonqualifying” segment.
C. should be combined with one of the other three segments and reported.
D. should be included in the segment disclosures at the discretion of management.

20. Collins Company reported consolidated revenue of $120,000,000 in 2008. Collins operates in two geographic areas, domestic and Asia. The following information pertains to these two areas:

What calculation below is correct to determine if the revenue test is satisfied for the Asian operations?
A. $58,000,000/$140,000,000
B. $50,000,000/$120,000,000
C. $58,000,000/$120,000,000
D. $50,000,000/$140,000,000

 

21. Refer to the above information. Which of the operating segments above meet the revenue test?
A. B, D, and E
B. A and D
C. A, B, and D
D. B, C, D, and E

22. Refer to the above information. Which of the operating segments above meet the operating profit (loss) test?
A. B and E
B. A and B
C. A, B, and E
D. A, B, C, and E

23. Refer to the above information. Which of the operating segments above are reportable segments?
A. B, C, and D
B. A, B, D, and E
C. B, D, and E
D. A, B, C, D, and E

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