Potential Costs of Providing Segment Information Include

question 46

Multiple Choice

Potential costs of providing segment information include:

• A) Management taking extra risks in order to attempt to generate increased returns in its segment.
• B) Allowing current or potential investors to identify that the entity is earning high profits in a segment.
• C) Disclosing that a segment is making a loss. This may lead to take-over bids by other organisations.
• D) Allowing current or potential competitors to identify that the entity is earning high profits in a segment. This may increase competition through new entrants or an attempt to replicate the factors leading to the entity's success.
• E) All of the given answers.

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Definitions:

Assignee

An individual or entity to whom rights or interests have been transferred by another.

Parol Evidence

A rule that prohibits the admission of oral or extrinsic evidence to contradict, vary, or add to the terms of a written contract.

Assignor

The party in a contract who transfers rights or interests to another, known as the assignee.

Obligee

A contractual party who agreed to receive something from the other party.