Reference no: EM132574364

Taft Corporation operates primarily in the United States. However, a few years ago, it opened a plant in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece.

Financial information for each of these facilities follows:

                                        Spain                  Italy                   Greece

Sales                         $180,000         $605,000        $455,000

Intersegment transfers      0                  100,100          65,000

Operating expenses        177,000              211,000        195,000

Interest expense            18,000                31,000          21,000

Income taxes                   69,000                 21,000        36,000

Long-lived assets                96,000                155,000             105,000

The company's domestic (U.S.) operations reported the following information for the current year:

Sales to unaffiliated customers$4,520,000

Intersegment transfers 437,000

Operating expenses 2,420,000

Interest expense 141,000

Income taxes 829,000

Long-lived assets 2,210,000

Taft has adopted the following criteria for determining the materiality of an individual foreign country:

Question 1: Calculate sales to unaffiliated customers within a country and as a percent of the consolidated sales.

Question 2: Calculate long-lived assets within a country and as a percentage of the long-lived assets.

Question 3: Apply Taft's materiality tests to identify the countries which are 10 percent or more of consolidated sales or consolidated long-lived assets to be reported separately.