Question

Problem 2 Quantex Corporation has five operating segments, as summarized below: Household Industrial Packaging Storage Services Sales to outside entities Intersegment sales Cost of goods sold Operating Expenses Interest Expense Income Tax Expense Assets 700,000 4,300,000 400,000 1,700,000 100,000 50,000 600,000 800,000 200,000 300,0002.700,000 700,000 900.000 200,000 1,300,000 200,000 600,000 30,000 10,000 40,000 5.000 60,000 210.000 70,000 100.000 18,000 540,000 1.900,000 1,600,000 70,000 32,000 Required: Determine which of the operating segments of Quantex Corporation are reportable segments for the period shown

Answer 1

Refer second page for calculating formulas

particular Household Industrial packing storage service 700000 4300000 400000 709000 Sales to outside entities (e) 9000 > 7,200 600,000 800,000 260,000 5900 Intersegment b saleslath) Tobal Sales (c) cost of goods 50,000 750,000 2000 8,850,00 1,00,000 4,900,000 1200 000 19000 700,000 960,000 4,6ogooo 300,000 2,709000 30,000 2,330 0 60000 30000 operating Expedes 200.000 1309,000 200,000 Interest expens 10,000 60ooo 5,000 55,000 1000 18000 | 458,000 Income Tom Expense 100,000 18,000 210.000 70,000 6,000 000 70,000 32000 1,600,000 1,900.000 32000 540,000 4,142,00 Assets (h) prohit LI I= (C-d-ees) 8 50,000 950,000 900000 900,000 30000 4,00 000 79000 1920000 To determine which segment is Reportable Followal following ratios need to determine. Household Industrial Packing storage services Revenue t 8.47% 55-36% 13.55% 21.461 1.13% t 2. Profit ut 13.02% 46.87% 15.63% 20.83% 3.65% 3. Assets % | 13.04% 45.871 38.637 1.69% 7.72% Repostable e segment Yes Yes Yes Yes 1. for Identifying whether a segment is reportable or not exceed 10% Any of the above ratios then it is a reportable sogning reportable One more criteria is is total identified segments revenue is. Scagnehann 75% of the total organisation revenue, then other segments Camscanced to be selected to fill the gap of 75% of revenue

So, here above Revenue 7 It all segments other than Service segment is reporto segment. criteria is achieved is calculated by Total Sales of a particular segment Total sales of All segment we sales Both includes both Internal and Enternal) prosit % is calculated by segment profit Total Organisation profit while calculating Above prosit it does not include Interest expense, Income tan expenses. Here all segments having only profit no losses. so the percentage is calculated by above formula otherwise first we have to determine total segment profit and total segment losses Then higher of the both will be the denominator for the computing ratio. (segment " Total organisation profit) the formula is Assets ratio 3. for Calculating Individual segment Asset Total segment Assets except service So, all segments segment is segment CS Scanne Reportable CamScanner