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Segment and Interim reporting

Slatter Corp operates primarily in the United States. However, a few years ago, it opened a plan in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece. Financial information for each of these facilities follows:

Spain Italy Greece
Sales..........................$395,000 $272,000 $463,000
Intersegment transfers......... 0 0 62,000
Operating expenses..............172,000 206,000 190,000
Interest expense................ 16,000 29,000 19,000
Income taxes.................... 67,000 19,000 34,000
Long-lived assets...............191,000 106,000 72,000

The company's domestic (US) operations reported the following information for the current year:

Sales to unaffiliated customers.............$4,610,000
Intersegment transfers.........................427,000
Operating expenses...........................2,410,000
Interest expense...............................136,000
Income taxes...................................819,000
Long-lived assets.............................1,894,000

Slatter has adopted the following criteria for determining the materiality of an individual foreign country: (1) sales to unaffiliated customers within a country are 10 percent or more of consolidated sales or (2) long-lived assets within a country are 10 percent or more of consolidated long-lived assets.

Apply Slatter's materiality tests to identify the countries to report seperately

© BrainMass Inc. brainmass.com August 19, 2018, 5:38 pm ad1c9bdddf

Solution Preview

In order to apply the tests we need the total consolidated sales and consolidated assets
Total consolidated sales are
United States $4,610,000
Spain $395,000
Italy $272,000
Greece $463,000
Total $5,740,000
The percentage of ...

Solution Summary

The solution explains how to apply the tests to determine which segments should be reported separately.

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