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Week9 HW - Exercise 14-3 Revenue Test Industry segments A...

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Exercise 14-3 Revenue Test Industry segments A and B are reportable segments under this test because their total revenue is 10% or more of combined total revenue of $366,000. The other segments do not meet this test. Operating Profit Test Industry segments A and B are reportable segments under this test because the absolute amounts of their operating profit or loss are each at least 10% of the greater of (1) the combined profit of all operating segments that did not incur a loss ($12,000 + $1,500 = $13,500), or (2) the combined loss of all operating segments that incurred a loss ($17,400 + $600 = $18,000). Segments A and B both have operating profit or loss of more than $1,800 (10% × $18,000). The other segments are not reportable segments under this test. Identifiable Assets Test Operating segments A and B are reportable segments because their identifiable assets are at least 10% of the combined assets of all segments. The other segments are not reportable segments under this test. 14 - 1
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Final Test Combined sales to nonaffiliated customers by segments A and B Combined sales to nonaffiliated customers by all segments = 200 , 136 $ 000 , 100 $ = 73% Because the 75% test is not met, one of the segments that did not qualify as a reportable segment under the previous tests must be included as a reportable segment. Exercise 14-6 March 31 June 30 Sept. 30 Dec. 31 A. Property taxes $ 15,000 $ 15,000 $ 15,000 $ 15,000 B. Major repairs 0 22,000 22,000 22,000 C. Inventory loss 0 0 150,000 0 D. Gain on sale of equipment 0 0 10,500 0 Exercise 14-8 First Quarter Estimated Annual Earnings $1,350,000 Add: Environmental Violation Penalties 25,000 1,375,000 Deduct: Dividend Income Exclusion 180,000 Estimated Taxable Income $1,195,000 Estimated Annual Income Tax Payable ($1,195,000 × 0.42) 501,900 Estimated Effective Combined Annual Tax Rate ( 000 , 350 , 1 $ 900 , 501 $ ) 37.2%
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