The Role of Segment Reporting in Business Essay

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Segment reporting allows a business entity to report on revenues earned and expenses incurred within a specific operating period. It allows a firm to review the progress of an investment by compiling information related to different segments of its operations. Information on similar segments of operations is integrated to come up with a clear report, which sums up activities covered by these segments.

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This approach allows a firm to aggregate segments with similar economic characteristics, to form a single operating segment. Crown segment reporting has three operating segments, which highlight different activities performed in the firm. The firm’s segment reporting system enables managers and other stakeholders review the performance of different units. This makes it easy for the firm to compile financial statements from different subsidiaries operating in diverse locations.

Owner’s equity is the amount of assets, which belong to the owner after all liabilities and expenses have been settled. This includes the capital invested by owners, retained earnings and other stored assets. The Crown Limited owner’s equity section, in the report for the year ended 30 June 2012, shows amount of equity in the firm, treasury shares, reserves and retained earnings. These features enable a company’s management reveal its financial performance to stockholders and other interested parties.

This encourages openness and integrity because its financial results are scrutinized, to determine their reliability before they are released. Some firms may also choose to offer their employees treasury shares. These shares are used as incentives to encourage employees to improve their performance in a firm.. Employees are offered a chance to own a stake in the firm, which changes their attitudes to work because they understand the value of hard work.

Intangible assets are those assets which are not visible physically but add a lot of value to a business. These items are mostly services and ideas, which help a firm stand out in a specific industry. These assets have the potential to bring a business firm future economic rewards, whose value cannot be easily estimated.

They need to be allocated a fair value related to their true standards , to enable a firm assess their real worth in monetary terms. Intangible assets possessed by Crown Limited are outlined in the firm’s books of account. They have a fixed time period and their value is related to this. Crown Limited owns goodwills, licenses and other intangible assets, whose value differ depending on their importance to the firm.

A statement of cash flow shows changes in cash amounts in a company within a particular period being reviewed. These changes are related to operating, investing and financing activities, which the firm does within a specific period. This information helps investors, creditors and other stakeholders in a firm, to evaluate its ability to run crucial activities related to cash without any problems.

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Cash flow statements help stakeholders evaluate the state of a firm’s finances, to determine its ability to meet various obligations within the industry it operates. Crown Limited has to comply with required standards whenever it prepares its cash flow statements. This shows that the firm is in a position to pay loans , salaries and other expenses, which are very crucial to its operations. A cash flow statement is divided in three parts namely; operating activities, investing activities and financing activities.

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IvyPanda. (2019, August 12). The Role of Segment Reporting in Business. https://ivypanda.com/essays/segment-reporting/

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"The Role of Segment Reporting in Business." IvyPanda, 12 Aug. 2019, ivypanda.com/essays/segment-reporting/.

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IvyPanda. (2019) 'The Role of Segment Reporting in Business'. 12 August.

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IvyPanda. 2019. "The Role of Segment Reporting in Business." August 12, 2019. https://ivypanda.com/essays/segment-reporting/.

1. IvyPanda. "The Role of Segment Reporting in Business." August 12, 2019. https://ivypanda.com/essays/segment-reporting/.


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IvyPanda. "The Role of Segment Reporting in Business." August 12, 2019. https://ivypanda.com/essays/segment-reporting/.

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