ReSA

The Review Schoo! of Accountancy

ITel. No. 735-9807 & 734-3989

PRACTICAL ACCOUNTING 1 C. Ube,rital C. Espenilla/C. Macariola

Opbrating Segr.nent, Discontinued Oneration and Non-current Asset Held-for-Sale

l. lluddy (lontpan,v and ils divisions are engaged solcly in manufilcturing operalions. l'he following data pertains
CI
to lhc itrdustrics in which opcralions wcrcr conduclcd .tirr thc year endcd Dec. 31, 20 l6:

.lqg$ett1s l&neutc ]ie'l Itslglue-li o11l Qpggline Profit Idcnlitlablr: Assets

outside:$ u'ithin
A I tt,000,000 2,000,000 ?e. 3,600,000 40,000,000
r] t3^000,000 3.000,000 ); 2,800,000 36.000,000
C 5,000.0(x) 7.00().000 . 2.400,000 2lt.000,000
t) 4,.500,000 1.5(n.000 t 1,200,000 t' 16,000,000
i, -5,400.00() 3.600.000 '.r I,400,000 14.000,000
l, tr01uaq0 - ----
()-:---:
_ 6IL0-000 6.000.000
'lotal ,189!q,()(10 l7.l(x).o(x) i--l, it 1200_0.00q .1.4.9-Q-9"0."0.._q:9
. u!

Using thc qttanlitativc tlrrcslrrkl. lxrw marly rcporlablc scgnlcrrts does lludrty Comptrny have'i
a) six c) lour
ft) fivc rl) threc

t 2. (lpcrating proiit and loss ligurcs lbr thc scven scglnents r"rl'Mobile Clornpany arc as ltrll6ws:

$!stii$r4 ()psru4iqglplit (fpgruurg&.:.s

K 14,000.000
,I. 2,0(){).O(X}
I\4 8.{)fi).00{ |

N 2,.500,000 ,
o n00,000
I) 900.0(x)
()
'lirtal ?-a0a,a00
2422A0,9!!t \,! ' 130q0qo
Ljsing thc cluantitativc thrcshold, which ot'thc abovc operating scgrncnts are reportable
basccl on the operating
prolit or loss cri{erion?
a. scgrllenls K, L, N4 and P K, M, and N
b. segrnents N. O and Q
$d. scgrucnts
nonc is rcpoflablc

3' on 'Ianuary l,2016, Power Ccuupany approved a plan lo clispose ol'a business scgmcn'I. lt is cxpccte<l
that thc
salc will ()ccur on April 30,2017. on l)ecelnber 31,2016, th" valuc of iet assets of thc segrncnt was
"o.rying
I'4.000'00t| and the net rec()vera6lc am<>unt was I)3,600,000. Durirrg 2016, thc c{)mpany
paid eurployecs
sevcrance and rclocation c()sls of P200.000 as a dircct rcsult ol'thc disc<intinuing
opcrations. "l'hc revcnue.s ancl
cxpcnscs o['thc discontinuing segmcnt during 2016 were: hrc6me tax ratc is 35%.

ltevenues Ixpenses
.Ianuary I to I)cccrnbcr 3l ... 4,400,000 5,800,000
I "low nrtrch will bc rcported as loss l'rom ordinary activitie s ol'the discrxrtinuccl segmcnt during 20 l 6?
a. I'}l,(X)0,000 c. p1,400,000
b. P1,300,000 $ rz,0oo,ooo
': !. On Scptcmbe r 1,2016, Polo Compatry approved a lbnnal plan rir scll a business scgnrenl. 'l'he sale
will occur in
Marclr 20 17. 'I'he scgment hacl a prolit beltrre tax o{'I'}1,400,00 during rhe entirc yeir of 2016, the cnrrying
valuc
ol'tJrc segmcltt was l'}lt'000,000 and the recoverablc amounr was P7,i00,000. During the ycar 2017
thc siglrcnt
has yct to bc disposed ol'. t'hroughout the year 2017 rhe scgmcnt had a prolit U"to." io* ot'p400,000: .I.he
carrving value rl1'thc scgr]relrl as ol'l)cccrnbcr 31.2017 is P8.400,000. Income tax ratc is 35%.

I I<rlrtruclr will ht' rcporlcd as inconrc liorn orclinary activities ol'the discontinued segmerrl. nct 6l.tax in2Ol7,]
O l'260,()0{) c. p520,()oo
b. t,455.000 d. I)tt45.000
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