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

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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 ...

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