The Accountant for Baxter Corporation Has Assigned Most of the Company's

question 7

Essay

The accountant for Baxter Corporation has assigned most of the company's assets to its three segments as follows:
The unassigned assets consist of $430,000 of unallocated goodwill and $270,000 of assets attached to the corporate headquarters.For internal decision-making purposes, goodwill is not assigned to the segments and the assets assigned to the corporate headquarters are allocated equally to the operating segments.
Required:
1.What is the proper threshold value to use in determining which of the operating segments shown above are reporting segments?
2.Which of the operating segments are considered reporting segments?

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, giving the holder a share in the company's profits and losses.

Market Price

The current purchase or sale price of an asset or service in the market.

Return on Equity

A measure of a corporation's profitability relative to stockholders’ equity, indicating how effectively management is using a company's assets to create profits.

Cash Coverage Ratio

This is a measure of a company's ability to cover its debt obligations with its available cash and cash equivalents.