A major producer of cereal breakfast foods had been reporting in its annual reports just one dominant
Question:
All cereal product operations are located in the United States, and all pasta product operations are located in Canada. The Standard Industrial Classification (SIC) number is 2043 for cereal products and 2098 for the Canadian subsidiary's pasta products. (The Standard Industrial Classification Index is prepared by the U.S. Office of Management and Budget and is used widely to define a company's major industrial groups.)
Required
a. Why would management be reluctant to disclose information about very successful and very unsuccessful-operations in the segmental disclosure footnote in the annual report?
b. Present both theoretical and applied arguments for including the pasta products segment with the cereal products segment as one internal operating segment, thus not requiring separate disclosure under ASC 280. How does the fact that the pasta products have suddenly become popular affect the disclosure requirements under ASC 280?
c. Present the ASC 280 requirements for reporting the cereal products and pasta products by geographic area. Must the Canadian operations be disclosed separately in a geographic disclosurefootnote?
Step by Step Answer:
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker