Segment Reporting

1368 WordsOct 11, 20086 Pages
Accounting Standards for the Public Sector Objective The objective of this Standard is to establish principles for reporting financial information by segments. The disclosure of this information will: (a) help users of the financial statements to better understand the entity’s past performance and to identify the resources allocated to support the major activities of the entity; and (b) enhance the transparency of financial reporting and enable the entity to better discharge its accountability obligations. Definition of a Segment A segment is a distinguishable activity or group of activities of an entity for which it is appropriate to separately report financial information for the purpose of evaluating the entity’s past…show more content…
May be misleading 1. The assumption is that the segments are autonomous, which may be an erroneous assumption 2. Globally integrated companies cannot be disaggregated easily 3. Hard to measure this cost IV. International Accounting Standards A. IASC requirements 1. IASC IAS 14 issued in 1981 revised in 1997 2. Disclosures primary segment line of business and geographic -- see Exhibit 8.1 a. Revenues (external and intersegment shown separately b. Operating Result c. Carrying amount of segment liabilities d. Cost to acquire property, plant equipment and related depreciation/amortization e. Significant non-cash expenses f. Share of profit of joint ventures g. Secondary segment information is also required VI. Regulations Around the World A. U.S. requirements 1. 1969 SEC requirements; 1976 FASB Statement 14 2. Disclosures for both line of business and geographic segments -- see Exhibit 8.2 a. Revenues from unaffiliated customers b. Intra-group transfers c. Operating profit or loss or net income or other profitability measures d. Identifiable assets 3. Additional disclosures for industry segments a. Depreciation b. Capital expenditures c. Equity in the net income and assets of associated companies 4. SFAS131 (1997) now limits management judgment in determining what constitutes a segment to be consistent with organizational structure like IAS14 5. A geographic segment -- segment sales
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