Problem
Slatter 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
|
$
|
425,000
|
$
|
302,000
|
$
|
493,000
|
|
Intersegment transfers
|
|
0
|
|
0
|
|
92,000
|
|
Operating expenses
|
|
202,000
|
|
236,000
|
|
220,000
|
|
Interest expense
|
|
28,000
|
|
41,000
|
|
31,000
|
|
Income taxes
|
|
79,000
|
|
31,000
|
|
46,000
|
|
Long-lived assets
|
|
221,000
|
|
136,000
|
|
102,000
|
The company's domestic (U.S.) operations reported the following information for the current year:
Sales to unaffiliated customers $ 4,730,000
Intersegment transfers 487,000
Operating expenses 2,470,000
Interest expense 166,000
Income taxes 879,000
Long-lived assets 1,954,000
Slatter has adopted certain criteria (each of the following requirements) for determining the materiality of an individual foreign country:
a. Calculate sales to unaffiliated customers within a country and as a percent of the consolidated sales.
B) Calculate Long-Lived within a country and as a percentage of the Long-Lived Assets.