Falconhead Supply Had Three Operating Segments During 2010 In Addition, Falconhead Has Incurred $100, 000 of Common Expenses

question 22

Essay

Falconhead Supply had three operating segments during 2010.In determining whether these segments are considered reportable segments, Falconhead has gathered the following information:
$\begin{array}{llll}&\text { Segment }\\& \underline{\text {A}}& \underline{\text {B}}& \underline{\text {C}}\\\text { Revenues } & \$ 60,000 & \$ 80,000 & \$ 160,000 \\\text { Expenses } & 30,000 & 50,000 & 85,000 \\\text { Assets } & 200,000 & 180,000 & 420,000\end{array}$ 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.

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Definitions:

S Corporation

A type of corporation in the United States that meets specific Internal Revenue Code requirements, allowing profits and some losses to be passed directly to owners' personal income without being subject to corporate tax rates.

Business Ownership

The legal possession and responsibility for an enterprise, involving rights to the profits and risks of losses.