Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 24 - Full Disclosure in Financial Reporting - Review and Practice - Questions - Page 1445: 11

Answer

The main reason for the controller's comments is that segment information identifies the most profitable segments. Competitors might use this information to enter that market and compete with the enterprise. In the long-term this will result in more competitors in the market, thus shareholders will lose value, as the enterprise's profitability will be reduced. The controller of Lafayette Inc., has thus, made reasonable comments.

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