Understanding Australian Accounting Standards 3E - Loftus - SMch22_sm_loftus

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1、Chapter22:OperatingSegmentsSolutionsSolutionsManualtoaccompanyUnderstandingAustralianAccountingStandardsJaniceLoftus,KenLeo,RuthPicker,VictoriaWise,KerryClarkByRuthPickerJohnWiley&SonsAustralia,Ltd201322.9©JohnWileyandSonsAustraliaLtd2013Chapter22:OperatingSegmentsSo

2、lutionsChapter22–OperatingSegmentsSolutionsComprehensionQuestions1.Segmentdisclosuresarewidelyregardedassomeofthemostusefuldisclosuresinfinancialreportsbecauseoftheextenttowhichtheydisaggregatefinancialinformationintomeaningfulandoftenrevealinggroupings.Discussthisas

3、sertionbyreferencetotheobjectivesoffinancialreportingbysegments.Manyentitiesoperateindifferentgeographicalareasorprovideproductsorservicesthataresubjecttodifferingratesofprofitability,opportunitiesforgrowth,futureprospectsandrisks.Disaggregationintomeaningfulandoften

4、revealinggroupingsassistsuserstobetterunderstandtheentity’spastperformance,tobetterassesstheentity’srisksandreturns,andmakemoreinformedjudgementsabouttheentityasawhole.Forexample,anentitymayappearprofitableonaconsolidatedbasisbutthesegmentdisclosuresrevealthatonepart

5、ofthebusinessisperformingpoorlywhileanotherpartisperformingwell.Overtimethepoorlyperformingpartmayaffecttheentireentity’sperformance.Thisaffectstheentity’ssharepricebecauseanalystsfrequentlylookatpredictedfuturecashflowsinmakingtheirsharepricedeterminations2.AASB8con

6、templatesthatsomeentitiesnotwithinitsscopemightvoluntarilydisclosesegmentinformation.Doyouthinkmanyreportingentitieswouldvoluntarilyprovidethesedisclosures?Explainyouranswer.No–segmentdisclosuresrevealinformationthatmaybecommerciallysensitive,anditmayrevealcompetitiv

7、einformationsuchasprofitmarginbysegment.Itisunlikelythatentitieswouldvolunteertodisclosemorethantheyhaveto.Also,segmentinformationinvolvesacertainamountofjudgmentandmanagersarelikelytobereluctanttomakeunnecessarydisclosuresinvolvingjudgment.Further,segmentinformation

8、canbecostlytocollateandthisprovidesafurtherdisincentivetomanagementofentitiestodiscloseadditional,non-mandatedsegment-relatedinform