Segment Reporting: Louvre Glass Co. has two operating divisions: (1) an amusement park and (2) a hotel.
Question:
Segment Reporting: Louvre Glass Co. has two operating divisions: (1) an amusement park and (2) a hotel. The two divisions meet the requirements for segment disclosures. Before considering transactions between the two divisions, revenues and costs were as follows (dollars in thousands):
The amusement park and the hotel had a joint marketing arrangement whereby the hotel gave out free passes to the amusement park and the amusement park gave out discount coupons good for stays at the hotel. The value of the free passes to the amusement park redeemed during the past year totaled $800,000. The discount coupons redeemed at the hotel resulted in a decrease in hotel revenues of $300,000. As of the end of the year, all of the coupons for the current year have expired.
Required: What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement?
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