These entity wide disclosures are required by paragraphs 324 of AASB 8 which

These entity wide disclosures are required by

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single reportable segment. These entity-wide disclosures are required by paragraphs 32–4 of AASB 8, which require that the additional information be provided only if it is not provided as part of the reportable segment information required elsewhere pursuant to AASB 8 o Risk and return profile Lufthansa 2018 Geographical Information about revenue Airbus Industrie 2019 geographic information about revenue
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Information about geographical locations - Conceivably, different geographical locations will give rise to different risks. Different countries will have different opportunities for growth, different government restrictions, tax treatments, cultural attributes and so forth. Pursuant to paragraph 33 of AASB 8: o An entity shall report the following geographical information, unless the necessary information is not available and the cost to develop it would be excessive: (a) revenues from external customers (i) attributed to the entity’s country of domicile and (ii) attributed to all foreign countries in total from which the entity derives revenues. If revenues from external customers attributed to an individual foreign country are material, those revenues shall be disclosed separately. An entity shall disclose the basis for attributing revenues from external customers to individual countries. (b) non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts (i) located in the entity’s country of domicile and (ii) located in all foreign countries in total in which the entity holds assets. If assets in an individual foreign country are material, those assets shall be disclosed separately Problems with Segment Reporting - Comparability. Identification of segments is very management- dependent and will differ across corporate groups - Allocation of common costs (eg. head office and financing costs) to segments – there will always be some “noise” in this process. - The importance of eliminating within group transactions still exists with segment reporting. - The cost of revealing information to competitors - a genuine problem. Standard setters have decided that the value of segment reports to outsiders outweighs the competitive disadvantage. - Reliability of segment reports – because of discretion allowed to management in identifying segments, allocating common costs, and their incentives to hide
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information from competitors, segment data may not always be reliable. It could be opportunistically manipulated. On the other hand - Is segment reporting useful to outsiders? Most studies have found that, YES it is useful, or at least it “makes a difference”. - Segment reports: o Appear to make security analysts’ earnings forecasts more accurate and also earnings forecasts using time series models o Appear to reduce stock market risk measures, and thus lower firms’ cost of capital.
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