Falconhead Supply had three operating segments during 2010.In determining whether these segments are considered reportable segments, Falconhead has gathered the following information:
$200,000180,000420,000\begin{array}{llll}&\text { Segment }\\& \underline{\text {A}}& \underline{\text {B}}& \underline{\text {C}}\\\text { Revenues } & \$ 60,000 & \$ 80,000 & \$ 160,000 \\\text { Expenses } & 30,000 & 50,000 & 85,000 \\\text { Assets } & 200,000 & 180,000 & 420,000\end{array}$ In addition, Falconhead has incurred $100, 000 of common expenses that can be reasonably allocated to the three segments.Since most of the common costs relate to the physical operating capability of Falconhead, a reasonable allocation method is to allocate the common costs to each segment based on the ratio of a segment's assets to total assets of the three segments.
Required:
Compute the profit (loss)for each operating segment under current GAAP provisions.

Question

Falconhead Supply had three operating segments during 2010.In determining whether these segments are considered reportable segments, Falconhead has gathered the following information:

200,000180,000420,000\begin{array}{llll}&\text { Segment }\\& \underline{\text {A}}& \underline{\text {B}}& \underline{\text {C}}\\\text { Revenues } & \$ 60,000 & \$ 80,000 & \$ 160,000 \\\text { Expenses } & 30,000 & 50,000 & 85,000 \\\text { Assets } & 200,000 & 180,000 & 420,000\end{array}

In addition, Falconhead has incurred $100, 000 of common expenses that can be reasonably allocated to the three segments.Since most of the common costs relate to the physical operating capability of Falconhead, a reasonable allocation method is to allocate the common costs to each segment based on the ratio of a segment's assets to total assets of the three segments.
Required:
Compute the profit (loss)for each operating segment under current GAAP provisions.

Mario Cardenas · Accepted Answer

Final Answer :  Operating Segments ‾ A ‾ B ‾ C ‾  Revenues  $ 60 , 000 $ 80 , 000 $ 160 , 000  Segment expenses  ( 30 , 000 ) ( 50 , 000 ) ( 85 , 000 )  Common expenses*  ( 25 , 000 ) ‾ ( 22 , 500 ) ‾ ( 52 , 500 ) ‾  Profit  $ 5 , 000 $ 7 , 500 $ 22 , 500 \begin{array}{lccc} &  \underline{	ext {Operating Segments}}\ &  \underline{	ext {A}} &  \underline{	ext {B}} &  \underline{	ext {C}}\	ext { Revenues }  &  \$ 60,000  &  \$ 80,000  &  \$ 160,000 \	ext { Segment expenses }  &  (30,000)  &  (50,000)  &  (85,000) \	ext { Common expenses* }  &  \underline{(25,000)}  &  \underline{(22,500)}  &  \underline{(52,500)} \	ext { Profit }  &  \$ 5,000  &  \$ 7,500  &  \$ 22,500 \\end{array}  Revenues   Segment expenses   Common expenses*   Profit  ​ Operating Segments ​ A ​ $60 , 000 ( 30 , 000 ) ( 25 , 000 ) ​ $5 , 000 ​ B ​ $80 , 000 ( 50 , 000 ) ( 22 , 500 ) ​ $7 , 500 ​ C ​ $160 , 000 ( 85 , 000 ) ( 52 , 500 ) ​ $22 , 500 ​ Segment A -   ( $ 200 , 000 / $ 800 , 00 0 ′ $ 100 , 000 ) = $ 25 , 000 ( \$ 200,000 / \$ 800,000  '  \$ 100,000 ) = \$ 25,000 ( $200 , 000/$800 , 00 0 ′ $100 , 000 ) = $25 , 000 Segment B -   ( $ 180 , 000 / $ 800 , 000 ⋅ $ 100 , 000 ) = 22 , 500 ( \$ 180,000 / \$ 800,000 \cdot \$ 100,000 ) = 22,500 ( $180 , 000/$800 , 000 ⋅ $100 , 000 ) = 22 , 500 Segment C   − ( $ 420 , 000 / $ 800 , 00 0 ′ $ 100 , 000 ) = 52 , 500 $ 100 , 000 - ( \$ 420,000 / \$ 800,000  '  \$ 100,000 ) = \frac { 52,500 } { \$ 100,000 } − ( $420 , 000/$800 , 00 0 ′ $100 , 000 ) = $100 , 000 52 , 500 ​

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