Answer
Diversified companies are those that have multiple unrelated products or businesses. Such companies require unique management expertise, provide many products and services, have many customer bases, and operate in different markets.
Following are some of the accounting problems related to diversified companies;
1. It is difficult to define segments of such companies for reporting purposes.
2. There is the complexity involved in allocating common costs to the different segments.
3. It is hard to evaluate the results of each segment when a lot of transfer pricing gets involved.
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