Following is financial information describing the six operating segments that ma
ID: 2519577 • Letter: F
Question
Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands):
Consider the following questions independently. None of the six segments has a primarily financial nature.
a. What minimum revenue amount must any one segment generate to be of significant size to require disaggregated disclosure? (Enter your answer in dollars but not in thousands.)
b. If only Red, Blue, and Green necessitate separate disclosure, is Fairfield disclosing disaggregated data for enough segments?
c. What volume of revenues must a single customer generate to necessitate disclosing the existence of a major customer? (Enter your answer in dollars but not in thousands.)
d. If each of these six segments has a profit or loss (in thousands) as follows, which warrants separate disclosure?(Select all that apply.)
Segments Red Blue Green Pink Black White Sales to outside parties $ 1,822 $ 823 $ 525 $ 320 $ 132 $ 110 Intersegment revenues 27 102 120 0 27 313 Salary expense 625 390 413 323 328 73 Rent expense 150 177 92 103 53 42 Interest expense 76 70 93 60 25 16 Income tax expense (savings) 152 98 72 (97 ) (75 ) 0Explanation / Answer
a.
Total Sales External = 2992
Total Itersegment revenue = 589
Total Revenue = 2992+589 = 3581
Reportable segment = 10% of 3581 i.e 358.1 (minimum revenue amount)
b. Yes because these three segments constitutes about 88% of total revenue i.e more than 75% which is requiremenr for reporting.
c. Revenue required for disclosure = 358.1
Revenue of pink = 320
Required amount = 358.1-320 = 38.1
d. Total of result = 1677
10% of 1677 = 168
Red, blue ,black and white warrants seperate disclosure