Question

ASC 280 focuses on providing financial statement users with information that can assist them in determining an entity's risks and potential returns. ASC 280 also discusses the concept of "enterprisewide disclosure" standards to further the amount of information provided to end users. Using the FASB Codification System as your reference, research ASC 280 and explain how it might be useful in presenting information that could be pertinent to an end user. From an ethical perspective, what would result if this information was omitted?

Answer 1

The concept of “enterprise-wide disclosure” is discussed in Accounting Standard Codification (ASC) 280 because organisations are not reporting information in financial statement in similar manner and which is not comparable with data & reporting of other entity. The reporting in financial statement as per the concept of enterprise-wide disclosure will be more comparable among entities. As per ASC 280, there are three types of entity-wide disclosure in which all reporting is based on product and services, geographic areas, and major customers of the entities. Even, these disclosures are required for public companies even there is only one reportable segment. Generally, financial statements are not capable of providing the required information of the operation of entities based on the products and services, geographic areas, and major customers. Therefore, it might be useful in presenting information on the basis of concept of “enterprise-wide disclosure” that could be beneficial for end user of financial statements. However, if the disclosures on the basis of geographic areas are not practical for entities because it is extremely costly for the corporation then it may be avoided, but any intentional omission is not permissible in the accounting standard codifications.