Problem 24-2

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P24-2.

(Segmented Reporting)

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 2015.

	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

(a)

Determine which of the segments are reportable based on the:

(1)	Revenue test.

(2)	Operating profit (loss) test.

(3)	Identifiable assets test.

(b)	Prepare the necessary disclosures required by GAAP

2.	What is the full disclosure principle in accounting? Why has disclosure increased substantially in the last 10 years

Write a 700-word paper addressing the following:

Answer Question 2 in Ch. 24 of Intermediate Accounting.
Explain the need for full disclosure in financial reporting.
Identify possible consequences of failing to properly disclose certain items in financial statements.