Case Study - Cabbage Ltd

Cabbage Ltd, a large conglomerate, reported segment information for 2023, based on the following identifiable segments:

	A	B	C	D	E	Corporate	Internal	Consolidated
Revenue	560	400	320	100	60	0	(200)	1 240
Profit	38	(15)	(8)	4	3	(5)	(2)	15
Assets	600	750	300	100	100	200		2 050

For financial reporting purposes, units D and E are aggregated into the 'Other' segment. The internal sales are from units A, B and C. The CFO, who is part of the CODM team, seeks your advice. She states they are about to sell business unit B and is worried how this will affect their segment disclosures.

In particular, she notes that unit D has started retailing a new product, which is very profitable and has significant potential for future growth. She states she is happy to combine units D and E as 'Other' to reduce the amount of information available to competitors.

Please use the provided case study as a reference point to provide appropriate responses to the questions asked.

Cabbage Ltd reported inter segment sales of 200.

From the perspective of the related party transaction, explain the disclosure requirements Cabbage has to consider in reporting the sale of 200 based on the provisions of AASB 124/ IAS 24 Related Party Disclosures.

Using the provisions of AASB 8/IFRS8 operating segment.

Provide a report to the CODM advising them on their segment reporting obligations, assuming unit B is sold. Your report should cover:

1. What are the reportable segments?
2. Recommendation about unit D.

Considering the CFO's desire to limit information that is likely to be made available to competitors through segmental reporting, provide a critical analysis with an explanation of how and why some fundamental principles of ethics for professional accountants may be violated in this scenario.

Based on the provisions of AASB 8 paragraph 27, provide a critical analysis with an explanation on how accounting policies of reportable segments are determined and the scope of the related accounting policies.