[Stgeorge]

Wiley Question

The following information pertains to Klein Corp. and its operating segments for the year ended December 31, year 1:

Combined profit of segments reporting profit

$600,000

Combined loss of segments reporting loss

(400,000)

Combined profit and loss of all segments

200,000

Klein has a reportable segment if that segment’s operating profit or loss is

$25,000 profit.

$60,000 profit.(they say this is the answer)

$55,000 loss.

$55,000 profit.

This answer is correct. ASC Topic 280 requires that selected data for a segment be reported separately if any one of three criteria is met. One of these criteria is met when a segment’s operating profit (loss) is greater than or equal to 10% of the greater of the absolute combined segment profit or loss. Thus, Klein has a reportable segment if the absolute amount of that segment’s profit or loss exceeds $60,000 ($600,000 x 10%).

This cant be right… it should be any segment that has a 20,000 profit or loss right?

FAR 81
AUD 65, 84 (Used Ninja MCQ which I say contributed to my huge increase in score I love you Jeff)
REG 87 (CPA excel Wiley Self Study Book, Ninja 10 point combo)
BEC 86! I Must Pass or I lose my FAR Credit, Pray for me(Becker, Wiley, WTB, Ninja MCQ, Ninja Notes)

DONE!!!!!!

Using : Wiley CPA Exam Review Textbook, Wiley TB, Ninja Notes, Ninja MCQ

[Anonymous]

it's right, it's just explained poorly because they throw around the word “combined” in all sorts of contexts without specifying which combined numbers they mean.

it's the greater of:

10% of every segment that has a profit, combine all those profits

or

10% of every segment that has a loss, combine all those losses, absolute value

if it helps, here's an example of what this problem could look like

segment A: $300,000 profit

segment B: $300,000 profit

segment C: $(200,000) loss

segment D: $(200,000) loss

combined profits of A+B = $600,000

combined losses of C+D = $(400,000), absolute value is $400,000

600,000>400,000, so we use $600,000 x 10% = $60,000

[Stgeorge]

Thanks you are right god i hate this exam

FAR 81
AUD 65, 84 (Used Ninja MCQ which I say contributed to my huge increase in score I love you Jeff)
REG 87 (CPA excel Wiley Self Study Book, Ninja 10 point combo)
BEC 86! I Must Pass or I lose my FAR Credit, Pray for me(Becker, Wiley, WTB, Ninja MCQ, Ninja Notes)

DONE!!!!!!

Using : Wiley CPA Exam Review Textbook, Wiley TB, Ninja Notes, Ninja MCQ

[Author]

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