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Trueblood Case

In: Business and Management

Submitted By tpatton2611
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Case 1

Issue 1: Identify the Operating Segments for SPI
According to ASC 280-10-50-1 an operating segment is a component of a public entity that has all of the following characteristics:
• It engages in business activities from which it may recognize revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same public entity).
• Its operating results are regularly reviewed by the public entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.
• Its discrete financial information is available. According to these rules SPI has 7 operating segments, they include the following: shampoo, cosmetics, diapers, paper towels, Jazzy Juice, Blasto Energy Drinks, and fruit and granola snacks.

Issue 2: Determination of Reportable Segments — Based on the information provided, identify the facts that are useful and develop initial thoughts as to which of SPI’s operating segments can be aggregated. Provide support for your initial thoughts regarding aggregation of operating segments and identify additional information that may be needed in order to reach a conclusion.
According to ASC 280-10-50-(11-13) Two or more operating segments may be aggregated into a single operating segment if they are similar in the following areas:
• The nature of the products and services
• The nature of the production processes
• The type or class of customer for their products and services
• The methods used to distribute their products or provide their services
• If applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities

According to these guidelines I feel like SPI can aggregate Jazzy Juice and Blasto Energy Drinks, I think this because even though their gross margins aren’t very close they are

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