Daftar Isi: Analysis of Segment Reporting with Reference to Selected Software Companies

Daftar Isi:

The primary objective of a corporation is to increase shareholders „wealth. To achieve this objective many corporations often engage in several lines of businesses and/or penetrate foreign markets to exploit opportunities to increase profits and cash flows. As a result of this operational diversity, publicly traded corporations are required by the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) to provide information about its reportable operating segments in the footnotes to the financial statements. Prior to 1997, segment reporting was guided by the Statement of Financial Accounting Standards No. 14, ―Financial reporting for Segments of a Business Enterprise (SFAS No. 14). The Board issued SFAS No. 14 because it believed that users of financial statements would be better able to analyze the underlying drivers of a corporation„s historical cash flows and past performance as well as assess future performance projections if the corporation„s major segments were disclosed in its financial reports. However, since the issuance of SFAS No. 14 in 1976, the SEC and the security-analyst community criticized the standard for the extent of information that was being disclosed by corporations regarding different segments. The analysts were concerned that they were not receiving enough information about the component parts of corporations.