Q29 What consideration may discourage executives from disclosing information about many segments of the enterprise? Multiple...

Q29 What consideration may discourage executives from disclosing information about many segments of the enterprise?

Multiple Choice

Limited usefulness of information to internal decision makers
Limited usefulness of the information to investors
Difficulty generating the needed information
Competitor potential use of proprietary information

Expert Solution

Correct answer to the above question is "Competitor potential use of proprietary information".

Usefulness of information to internal decision makers or investors is not to be decided by executives of enterprise, and generating the information for segment reporting is also not challenging or discourages to executives.

The major worry for the executives of an enterprise while disclosing segment wise information may be that enterprise's competitors may get detailed information about the entity, which could be a disadvantage to the entity in terms of business. As competitor can easily get details with regards to business, and can make a prediction with regards to future upcoming plans. For example if in the balance sheet there is a capital work in progress, then competitor can easily understand that there is some expansion of business is under process and they can plan accordingly which can be disadvantageous to the enterprise.

ekkarill92 answered 1 year ago

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