Watson Inc., a multinational company, has operating divisions in France, Mexico, and Japan as well as in the United States. The company reported the following information on its consolidated financial statements for 20X5:From the consolidated income statement:Sales revenues …….. $856,000,000Net income ……… 60,000,000From the consolidated balance sheet:Total assets ………. 750,000,000The following additional information was assembled for Watson’s domestic and international operations for 20X5 (dollars stated in millions):Additional Information1. The domestic intracompany sales of $50,000,000 were made to Watson’s French division. A total gross profit of $20,000,000 was realized by Watson’s domestic operations on these sales. At December 31, 20X5, $10,000,000 of the total gross profit was unrealized from a consolidated viewpoint. At December 31, 20X5, Watson’s French division owed domestic operations $15,000,000 related to these sales.2. The intracompany sales made by Watson’s Japanese division were made to Watson’s Mexican division. The Japanese division realized a gross profit of $2,000,000 on the sales. At December 31, 20X5, all of the goods sold to the Mexican division remained in its inventory. At December 31, 20X5, the Japanese division had an $8,000,000 receivable related to these sales.Requireda. Determine whether Watson Inc. must separately report its foreign operations.b. Determine which of the three individual foreign geographic segments is separately reportable using a 10 percent materiality threshold.c. Prepare the information about the company’s domestic and foreign operations as required by ASC280.
Watson Inc a multinational company has operating divisions in France