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Explain operating segments of an enterprise.s SFAS No. 131 d

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Playing devil's advocate could you just not prepare financial information? Wouldn't it be advantageous to a company to not segregate the information with the hopes of maintaining a competitive advantage? Please explain

if Pepsi is launching a new water product but they are in the infant stages of doing so wouldn't it be to their advantage of not preparing separate financials so that Coca-Cola doesn't jump in and perhaps steal their business? please explain

Why couldn't a company like Pepsi not make their new water product a segment of the company? What if the new water product was part grouped with their normal business? Or what if management grouped the new water product in with all of their new products?

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Solution Summary

Your response is 328 words includes a quote from the FASB on SFAS No. 131, a response about how disclosures impact competitive posture, and ideas about how to circumvent disclosing information on a new water product.

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Explain operating segments of an enterprise --> How FASB No. 131 defines an operating segment.

RESPONSE: See http://www.fasb.org/summary/stsum131.shtml for definition of a segment that is required to be disclosed (direct quote):

"Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. However, this Statement does not require an enterprise to report information that is not prepared for ...

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  • MSc, University of Virginia
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