Segment reporting generally refers to the disclosure practice of diversified groups to report their results generated from units operating in markets with different profitability, risks and growth potential. The current accounting standard, AASB 8, adopts a management approach to segment reporting.
In this assignment, you are required to critically discuss the determinants and consequences of this approach to segment reporting.
Hint: Your discussion should cover at least all of the following areas.
1. What are the differences between AASB 8 and the old accounting standards on segment reporting?
2. What is the rationale for adopting the management approach?
3. Critically analyse the advantages of the management approach and use examples to support your claim.
4. Critically analyse the disadvantages of the management approach and use examples to support your claim.
5. Do you expect the number of reportable segments to increase or decrease after the adoption of AASB 8? Why? Provide evidence to support your argument by using three companies listed on the ASX.