You are presenting segmental information regarding your company to the finance committee of the board of directors and have been asked the following questions.
Provide your response to each of the following questions:
1. How is it possible that the distribution of wine and spirits have been combined with the distribution of personal care products to constitute a single operating segment?
2. Why don’t the third-quarter revenues traceable to reportable segments agree with the third-quarter revenues shown in the consolidated income statement?
3. From a competitive standpoint, would it be better to show more or fewer segments on our financial statements?
4. How is it possible that two of our segments, which have immaterial sales revenue compared to consolidated sales revenue, are being shown as reportable segments?
5. How is interest expense on the company’s bonds payable allocated to the various segments?
6. How is it possible that the total of segmental net sales exceeds the net sales for the entire company?
7. Is it possible to roughly calculate a segment’s annual cash flow?

  • CreatedApril 13, 2015
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