Wiley CPAexcel Exam Review 2014 Focus Notes: Financial Accounting and Reporting

Focus on: Segment Reporting—Module 20

SEGMENT REPORTING

Definition of Segments

Segments identified using management approach:

• Component earns revenue and incurs expenses
• Separate information is available
• Component is evaluated regularly by top management

Reportable Segments—Three Tests

1. Revenue test—Segment revenues ≥ 10% of total revenues

2. Asset test—Segment identifiable assets ≥ 10% of total assets

3. Profit or loss test

• Combine profits for all profitable segments
• Combine losses for all losing segments
• Select larger amount
• Segments profit or loss ≥ 10% of larger amount

Disclosures for Reportable Segments

Segment profit or loss

• Segment revenues include intersegment sales
• Deduct traceable operating expenses and allocated indirect operating expenses
• Do not deduct general corporate expenses

Segment revenues

Segment assets

Interest revenue & expense

Depreciation, depletion, & amortization

Other items

PARTNERSHIP

Admitting a Partner

Calculating the Contribution—No Goodwill or Bonus

Partnership equity (before new partner’s contribution)

÷ 100%—New partner’s percentage

= Total capital after contribution

× New partner’s percentage

= Amount to be contributed

Journal entry:

Cash	xxx
New partner’s equity	xxx

Excess Contribution by New Partner—Bonus Method

Partnership equity (before new partner’s contribution)
+ New partner’s contribution	New partner’s contribution
= Total capital after contribution
× New partner’s percentage
= New partner’s capital ...