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Case analysis for Class 5

Case analysis for Class 5 - Jin Zhao G31834520 Case...

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Jin Zhao G31834520 Case analysis for Class 5 Brief Summary of the handout of international segment reporting: 1. Why is segment reporting needed? Owning to the lack of correspondence between financial statements and the nature of the corporation’s activities, disaggregated information in segment reporting can ensure that overall performance, risks, and prospects can be better evaluated. 2. Who are the users? Investors of MNEs, employees, creditors, and host government 3. What tests are used to detect the benefits? (1) Predictive ability test; (2) stock market reaction tests 4. What are the benefits? (1) Segment-based forecasts seemed to outperform consolidated-based forecasts (2) Disclosure of LOB and geographic segment data results in a decrease in market assessments of risk 5. What are the costs? (1) The cost of compiling, processing, and disseminating segments data will be expensive especially for those who don't have internal information system (2) Disseminating information is likely to benefit existing or potential competitors, but this is case-specific (3) It may be inappropriate and therefore potentially misleading. 6. What are the problems of segment reporting. (1). For UK GAAP, unclear guidance about “material" will make auditor's assessment extremely difficult. (2). the lack of guidance will incur the manipulation (3).Management may be inefficient, and segments identified are unlikely to reflect the company's actual diversification strategy. 7. The appliance by US GAAP and UK GAAP
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Jin Zhao G31834520 USGAAP UK GAAP Determination of segments determination of an enterprise's industry segments must depend to a considerable extent on the judgment of the management of the enterprise the directors of the company should have regard to the manner in which the company's activities are organizied, and depend what is relevant and reportable basing on the unique characteristics of each company Disclosure requirements 1. disclosure of reprtable segment items in IAS14 based on lines of business, geographic location, or a combination of both 2.disclosure in referred to (1)the country of domicile, (2)any individually material country,and(3)all foregn countries in the aggregate.
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Case analysis for Class 5 - Jin Zhao G31834520 Case...

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