TABLE OF CONTENTS The objective of IAS 14 Segment Reporting is to enable users of financial statements to obtain a better understanding of past performance by enabling users to better assess the entity's risks and returns as they relate to the individual segments of the business. Segment information enables a more informed judgement about the enterprise as a whole.
Consolidated data 'hide' information about how each of the major parts of the business is performing. There is a need to disaggregate the consolidated data to see which segments are profit making, and which are subject to significantly different levels of liquidity, gearing etc.
In addition, over the last 30 years there has been a growth of multinational companies, and users need to find out how different geographical regions are performing.
Diversified operations represent distinct products or markets with distinct risks and returns, and it would be impossible to assess the effect these individual segments have had on past performance and their likely effect on future performance without having the information disaggregated.
A business segment is a distinguishable component of an enterprise which provides an individual product or service that is subject to different risks and returns from other business segments. In deciding how to split segments, consideration should be given to the nature of the product, the production processes, the type of customer, the distribution methods and the regulatory framework.
A geographical segment is...
