Question

yen Teporting Appendix 3] The Canton Corporation operates in four distinct business segments. The segments, along with 2021 information on revenues, assets, and net income, are listed below ($ in thousands): Segment Pharmaceuticals Plastics Farm equipment Electronics Total company Revenues $ 2,000 3,000 2,500 500 $ 8,000 Assets $ 1,000 1,500 1,250 250 $ 4,000 Net Income $ 200 279 329 40 $ 830 Required: 1. For which segments must Canton report supplementary information according to U.S. GAAP? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Pharmaceuticals Plastics 2 Farm equipment < Prey 9 of 9 Next

Answer 1

Answer:

For the following 3 segments, supplymentary information must be reported.

• Pharmaceuticals.
• Plastics.
• Farm equipment.

Tick the all above three. And empty the box for electronics segment.

Explanation:

According to US GAAP ,a company need not provide additional information about all of its segments, but if a segment is having atleast 10% revenue of total revenue, 10% assets of total assets , 10 % net income of total net income, it must give additional information or report of this segment.

In the data provided in the question ,

10% of total revenue = 10% x $ 8,000 = $ 800

10% of total Assets = 10% x $ 4,000 = $ 400

10% of total net income = 10% x $ 830 = $ 83

We can see that ,the first three segments pharmaceuticals, plastics and farm equipments have more than 10 % revenue of total revenue, more than 10% assets of total assets and more than 10 % net income of total net income. So additional information must be provided by the company about these segments in its report .

The fourth segment electronics revenue ,assets or net income is less than 10% of total revenues, assets, or net income respectively. So no additional information need to be reported for this segment .

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