International Financial Reporting Standards require that publicly traded companies provide segment information based on the management approach. An operating segment must engage in activities that generate revenue and incur expenses, and discrete information is available that is regularly reviewed by the chief operating decision maker. If an operating segment meets specific criteria then it is reportable and disclosed in the notes to the financial statements.
Instructions
(a) What does financial reporting for segments of a business enterprise involve?
(b) What are the reasons for requiring financial data to be reported by segments?
(c) What are the possible disadvantages of requiring financial data to be reported by segments?
(d) What accounting difficulties are inherent in segment reporting?