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A Study Of Segment Report

Posted on:2003-06-04Degree:MasterType:Thesis
Country:ChinaCandidate:H YuFull Text:PDF
GTID:2156360065950674Subject:Accounting
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The stronger our economy is, the more enterprises diversify their operations in order to occupy markets and reduce risks. These companies always manage products in different industries, geographies and national boundaries. On the other hand, our country is carrying out a policy which superiority enterprises annex inferior others. Many companies annex inferior ones that are differ in industries and regions. These diversified companies always have several industries and geographies that are differ in characteristics, risks and earning powers. Consolidated financial statement ignores some important information of diversified operations, making the users of financial information unaware of the profit-making ability, developing tendency and risk condition of different industry and geography. Segment report comes out in order to make up the weakness of consolidated financial statement. Segment report classifies the financial information by geography, industry and products. Segment report can provide more information of several segments. It can enhance judgement and forecast about risk. I discuss the importance of segment report to our country by depicting its meaning to stock market, indirect financing market, internal management and macro-control.From its emergence, segment report gives rise to controversy in theory and practice. Agency theory, Capital efficiency theory and Accounting target theory establish it basis to identify its necessity. Agency theory thinks that there are unsymmetries between entrusters and agents. Which agents supply true information can benefit decreasing cost and can maximize profit between both sides. Capital efficiency theory thinks efficiency is not high on the stock market now, so it is necessary for listing companies to offer information. And the quality of information has direct influence to stock market. Object of financial accounting is offering useful information for the users. From quality characteristic of accouting information, such as relevance, reliability, comparability and materiality all display that segment report is propitious to the quality and usefulness of accounting information. Segment report adds to the cost of information, but cost and reward is a whole entirety. If we want to maximize the society reward, We must implement law criterion. Segment report can build up a visualize which listing company discloses information to the public, So it is propitious to rivalrousness.The first problem is the basis of recognizing segments. There are some methods, but the major is industry segment and geography segment. When recognizing segments, some factors such as risk, reward, judgement of administrate office should be take into account. SFAS-14 adopts a new thought "managing method" to identify segments. The identification of reportable segment is surveying and determining branches according to essentiality and using three quantitative thresholds such as revenue, result and asset. Distribution between branches is the key to the segment revenues. From its aims, Segment report offers particular information of different branches for the users. For the sake of reflecting true financial condition, Distribution between branches should be included. The identification of profit and loss should keep to the principle which revenue should be allotted to cost and charges. When identifying the basis of apportion charges, administrate office should judge and recognize from the whole company and individual branches. The identification and measurement of segment asset and owes include two aspects: the direct ones and which need to distribute on the quantitative basis. Currently, the requirements on the disclosure of segment information in our country are still in the embryo. There is not a single standard to comply with. I point out the shortages of current provisions and conclude that it is necessary to draft a standard on the disclosure of segment information. Absorbing the methods which are applicable to our country, My initial imagination of segment report stand...
Keywords/Search Tags:segment report, segment, industry segment, geography segment.
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