Question
A. Alfafa has the following operating segments. The revenues (internal and external), profits and assets are our below. Segment A B C D E F
A. Alfafa has the following operating segments. The revenues (internal and external), profits and assets are our below.
Segment
A
B
C
D
E
F
Revenue
RM'000
12,000
44,000
13,000
9,000
16,000
6,000
100,000
Profit or loss
RM'000
5,000
8,000
(1,000)
(2,000)
2,000
1,700
13,700
Total assets
RM'000
60,000
110,000
50,000
75,000
20,000
10,000
325,000
REQUIRED:
Determine the reportable segments for Alfafa by using the quantitative threshold test and 75% constraints.
[10 marks]
B. In its annual financial statements for the year ended 31 March 2013, Lulu Erika, a publiclimited company, had identified the following operating segments:
(i)Segment 1 local train operations
(ii) Segment 2 inter-city train operations
(iii) Segment 3 railway constructions
The company disclosed two reportable segments.
Segments 1 and 2 were aggregated into a single reportable
operating segment. Operating segments 1 and 2 have been aggregated on the basis of their similar business characteristics, and the nature of their products and services.
In the local train market, it is the local transport authority which awards the contract and pays Lulu Erika for its services.
In the local train market, contracts are awarded following a competitive tender process, and the ticket prices paid by passengers are set by and paid to the transport authority.
In the inter-city train market, ticket prices are set by Lulu Erika and the passengers pay Lulu Erika for the service provided.
REQUIRED:
Based on MFRS 8, advise Lulu Erika's on how the above accounting issue should be dealt with in its financial statements for the years.
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