Segmented Reporting
Tangerine Corporation's Most Recent (Condensed) Income Statement Is

question 37

Essay

Segmented reporting
Tangerine Corporation's most recent (condensed) income statement is presented below: $\begin{array}{llr} \text { Revenues.} &&\$2,500,000\\ \text { Expenses} &\\ \text {Cost of goods sold } &\$1,000,000\\ \text { Operating and administrative expenses } &500,000\\ \text {Depreciation expense } &100,000&1,600,000\\ \text { Income before taxes. } &&900,000\\\text { Income tax expense. } &&270,000\\ \text { Net income. } &&\$630,000\\\text { Earnings per share }(100,000 \text { shares }&&\$6.30\\\end{array}$

$\text { The following data relates to Tangerine's operating segments: }$

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Percent Identified with Segment }$
$\begin{array}{llll}&\text { Hotels } & \text { Grains } & \text { Candy }\\\text { Revenues } & 42 \% & 50 \% & 8 \% \\\text { Cost of goods sold } & 48 & 49 & 3 \\\text { Operating and administrative expenses } & 35 & 50 & 15 \\\text { Depreciation expense } & 46 & 42 & 12\end{array}$
Included in the amounts allocated to each segment on the above percentages are the following expenses, which relate to general corporate activities: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Operating Segment }$
$\begin{array}{lrrrr}&\text { Hotels }&\text { Grains } &\text { Candy }& \text { Totals }\\\text { Operating and administrative expenses } & \$ 30,000 & \$ 22,000 & \$ 8,000 & \$ 60,000 \\\text { Depreciation expense } & 4,000 & 5,000 & 3,000 & 12,000\end{array}$
Instructions
(Assume that the corporation adheres to IFRS)
a) Prepare a schedule showing the amounts distributed to each segment.
b) Based only on the above information, which segments must be reported and why?

---

Definitions:

Perfectly Inelastic

Refers to a market situation where the quantity demanded or supplied does not change regardless of the price level changes.

Perfectly Elastic

Describes a market situation where quantity demanded or supplied changes by an infinite amount in response to any change in prices.

Demand

The willingness and ability of consumers to purchase goods and services at various prices.

Price Elasticity

A measure of the sensitivity of demand or supply to changes in price, indicating how the quantity demanded or supplied responds to price changes.