Practical Accounting I

Operating Segment and Interim Reporting

May 3, 2019

Problem I

Earl Company identified the following segments for the current year:

Segment Revenue Profit Assets

A P10,000,000 P1,750,000 P20,000,000
B 8,000,000 1,400,000 17,500,000
C 6,000,000 1,200,000 12,500,000
D 3,000,000 550,000 7,500,000
E 4,000,000 575,000 5,500,000
F 2,000,000 525,000 3,000,000

What are the reportable segments?

Problem II

Dennica Company provided the following information for the current year:
Combined profit of segments reporting profit P6,000,000
Combined loss of segments reporting loss (4,000,000)
Combined profit and loss of all segments 2,000,000

To qualify as reportable segment, the segment profit or loss should at least be what amount?

Problem III

Enoch Company reported revenue of P50,000,000, excluding intersegment sales of P10,000,000, expenses of P47,000,000 and net
income of P3,000,000 for the current year. Expenses included payroll costs of P15,000,000. The combined assets of all segments
at year-end totaled P45,000,000.

1. What is the minimum amount of sales to a major customer?

2. What is the minimum amount of external revenue to be disclosed by reportable segments?

Problem IV

Prince Company provided the following information for the first quarter:

Loss from typhoon P 800,000

Insurance for the calendar year 200,000
Loss on inventory writedown 100,000
Property taxes for the calendar year 500,000
Advertising of a new product 300,000
Depreciation expense for the year 600,000
Year-end bonuses to employees 1,200,000
Ordinary repairs to employment 150,000

What total amount of expenses should be reported in the first quarter?

Problem V

Jayson Company reported P950,000 net income for the quarter ended September 30, 2019 which included the following after-tax
items:

A P600,000 expropriation gain realized in May 2019 was allocated equally to the second, third, and fourth quarters of 2019. A
P160,000 cumulative effect loss resulting from a change in inventory valuation method was recognized on August 31, 2019. In
addition, the entity paid P480,000 on February 1, 2019, for 2019 calendar-year real property tax. Of this amount, P120,000 was
allocated to the third quarter of 2019.

What is the net income for the quarter ended September 30, 2019?

Problem VI

Shaira Company, a calendar-year corporation, had the following income before tax provision and estimated effective annual tax
rates for the first three quarters:

Quarter Income before income tax Effective annual tax rate

1 5,000,000 30%
2 8,000,000 20%
3 7,000,000 25%
What is the income tax provision in the interim income statement for the third quarter?