The controversy of segment reporting is that it is based on information provided to the CODM. Some
Question:
The controversy of segment reporting is that it is based on information provided to the CODM. Some argue that this makes segment reporting non-comparable. Others argue that it is valuable because investors can see how the business is run 'through the eyes of management'. It is much lower cost reporting than prescribing a set list of disclosures which might need another set of systems to collect the information.
Download the financial statements from two companies in the same industry listed on the ASX or NZX and review the segment disclosures.
1. How comparable are the segment disclosure?
2. How useful are the disclosures? (Do they provide an investor with an insight into how the business is run?)
3. Is the cost of financial reporting an important element of choosing an accounting standard?
Step by Step Answer:
Financial Reporting
ISBN: 9780730396413
4th Edition
Authors: Janice Loftus, Ken Leo, Sorin Daniliuc, Belinda Luke, Hong Nee Ang, Mike Bradbury, Dean Hanlon, Noel Boys, Karyn Byrnes