Segment Reporting And Related Issues

The stronger our economy, the more enterprises diversify their operations in order to occupy markets and reduce risks. Diversified companies always have several industries and markets which are differ in characteristics, risks and earning powers. Therefore, the usefulness of the information based on the whole company is decreased. The advantage of consolidated financial statement is that it can fairly present the financial condition and operating results of an entity as a whole. However, it also ignore some important information of diversified operations, making the users of financial information unaware of the profit-making ability, developing potential and risk condition of different industry and geography. Segment reporting classifies the information of a company's subsidiaries by geography, industry or products, making up the weakness of consolidated financial statement. It is new to our country and it worth much research and discussion. This thesis tries to discuss some difficult accounting problems resulting from segment report. Then I make some suggestions for our segment reporting standards through drawing on the experiences of other countries. In this thesis, the discussion on segment reporting is divided in five parts.Part one, introduction. This thesis begins with the international background of segment reporting to interpret the necessity of its existence. Then I discuss the importance of segment reporting by depicting its impact on stock market, indirect financing market, macro-control and internal managementPart two, segment information's quality and principles of disclosure. This part concerns the relevance, reliance and comparability of segment information and points out that the usability of segment information is the consolidated result of relevance, reliance and comparability. Besides, the cost-benefit principle and importance principle should also be taken into account.Part three, the research results in other countries. I introduce the practices of other countries in six aspects: the subject of segment reporting, recognition of segment, the format of segment reporting, identification of reportable segment, theinformation to be disclosed and accounting policy in segment reporting. Through comparing different ways, I expect that it can be helpful to the improvement of our segment reporting.Part four, the current situation of the disclosure of segment information in our country and my suggestions. Although the Accounting Standard-Segment Reporting draft has improved in several aspects, there are still a lot to be considered. So I point out the shortages of this draft and make suggestions on the scope of the standard to be applied, recognition of segments, segment revenue's components, segment expense's components, vertical segment and the time to disclosure of segment information.Part five, analysis of segment reporting. This part concerns the analysis of segment reporting. And through a case study, illustrate the business analysis, accounting analysis and financial analysis of segment reporting.Although I tried my best to closely combine accounting theories with our current situation, this thesis must have many shortcomings due to my theoretical limits and practical experience. I sincerely anticipate specialists' guide.