Question

Cineplex Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2018.

	A	B	C	D	E
Sales revenue	\(40,000	\)75,000	\(580,000	\)35,000	\(55,000
Cost of goods sold	19,000	50,000	270,000	19,000	30,000
Operating expenses	10,000	40,000	235,000	12,000	18,000
Total expenses	29,000	90,000	505,000	31,000	48,000
Operating profit (loss)	\)11,000	\((15,000)	\)75,000	\(4,000	\)7,000
Identifiable assets	\(35,000	\)80,000	\(500,000	\)65,000	\(50,000

Sales of segments B and C included intersegment sales of \)20,000 and $100,000, respectively.

Instructions

(b) Prepare the necessary disclosures required by GAAP.

Short answer

Revenues, assets, and profit from reportable segments are $575,000, $615,000 and $71,000 respectively.

Step-by-step solution

Meaning of GAAP

GAAP provides a uniform technique for compiling financial statements and executing accounting functions for businesses. Small business owners and accountants can use GAAP to maintain track of a company's finances. GAAP simplifies the presentation of a company's finances to outside parties (such as banks).

Disclosures required by GAAP

	A	B	C	Others	Total
External Revenues	$40,000	$ 55,000	$480,000	$ 90,000	$665,000
Intersegment Revenues		20,000	100,000		120,000
Total Revenues	40,000	75,000	580,000	90,000	$785,000
Cost of Goods Sold	19,000	50,000	270,000	49,000
Operating Expenses	10,000	40,000	235,000	30,000
Total Expenses	29,000	90,000	505,000	79,000
Operating Profit (Loss)	$11,000	$(15,000)	$75,000	$11,000	$82,000
Identifiable Assets	$35,000	$80,000	$500,000	$115,000	$730,000

Working notes:

Reconciliation of revenues

Total segment revenues	$785,000
Revenues of immaterial segments	(90,000)
Elimination of intersegment revenues	(120,000)
Revenues from reportable segments	$575,000

Reconciliation of profit or loss

Total segment operating profit	$ 82,000
Profits of immaterial segments	(11,000)
Profits from reportable segments	$ 71,000

Reconciliation of profit or loss

Total segment assets	$730,000
Assets of immaterial segments	(115,000)
Assets from reportable segments	$615,000