2.9 Comparison to Competitors
The management approach required for determining operating segments under ASC 280 is specific to
each preparer. While an entity can review segment disclosures from the financial statements of other
public entities, including its direct competitors, the disclosures are unlikely to be comparable unless all
aspects of the entities related to the segment determination are comparable.
While the FASB requires entities to use the management approach to identify
operating segments, it acknowledges that some level of comparability may be
important for financial statement users. ASC 280-10-05-5 notes:
To provide some comparability between public entities, this Subtopic requires
that an entity report certain information about the revenues that it derives
from each of its products and services (or groups of similar products and
services) and about the countries in which it earns revenues and holds assets,
regardless of how the entity is organized. As a consequence, some entities are
likely to be required to provide limited information that may not be used for
making operating decisions and assessing performance.
See further discussion of entity-wide disclosures of products and services and geographic areas in
Chapter 5.
Example 2-8
Company A and Company B both manufacture and distribute windows, siding, and insulation used in the
construction of residential and commercial units. Under A’s structure, decisions are made and performance is
evaluated on a regional basis (e.g., North, South), whereas B makes decisions and evaluates performance on a
product-line basis (e.g., siding, insulation).
Accordingly, A and B would not report similar operating segments. Rather, A would report operating segments
based on regions, and B would report operating segments based on product lines.