ACCTG 642: Case 08-5 Sell It Products Inc.

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MEMORANDUM To: Dr. John J. Morris, Department of Accounting From: Group 5 (Jeremy Moore, Xing Zhang, Andrew Ellison) Date: April 8, 2013 Subject: ACCTG 642: Case 08-5, Sell-It Products Inc. Statement of Relevant Facts Sell-it Products Inc. is a manufacturing business that sells several different products to grocery stores, drug stores, and other mass merchandisers. In order to better represent their company, they have divided their company into three divisions: 1. The beauty care division contains various cosmetics and shampoo. 2. The family care division contains paper towels and diapers. 3. The drinks and snacks division contains Blasto Energy Drink, Jazzy Juice, and fruit & granola snacks. Each product has its own product manager who…show more content…
* We aggregate the juicy and energy drinks production lines. As with the criteria stated in ASC 280-10-50-11, juicy and energy drinks shared all the criteria and thus can be combined as desired. c. The alternative argument will be to aggregate the snacks segment to the drinks reporting segment because they have shared majority criteria of ASC 280-10-50-11. The other alternatives will be to aggregate other segments with the reporting segments. d. We are not convinced by the argument. First of all, the snacks segment should not be aggregate to the drinks segment because they have different production processes in nature. Second, ASC 280-10-50-14 stated “ If total of external revenue reported by operating segments constitutes less than 75 percent of total consolidated revenue, additional operating segments shall be identified as reportable segments until at least 75 percent of total consolidated revenue is included in reportable segments”. Since the combined reporting revenue of the three segments has exceeded the 75% threshold, there is no need to add more segments to the reporting segments. Pending or Future Standards

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