Eliza Snow is the controller for Lorenzo Manufacturing. Lorenzo has five different product lines and conducts significant operations in six different countries. Lorenzo’s internal organization is set up so that a division manager is in each of the six different countries, with responsibility for sale of all five products in that country. Internal accounting reports are prepared based on this same organizational structure. Snow has heard rumors that the FASB rules will require Lorenzo to externally report summary segment information by product line. Snow is very upset because this is completely at odds with what Lorenzo does internally. She estimates that compiling segment information by product line will require at least a week’s worth of work by her and her entire staff.
Does Snow have a correct understanding of the provisions of FASB Statement No. 131 on segment reporting? Explain.