Question

Select all that apply GAAP and IFRS rules ______. require that the same method be used for both internal and external segment reporting create incentives for companies to use the contribution margin format in segment reporting require segmented financial data be included in annual reports create problems in reconciling internal and external reports

Answer 1

GAAP and IFRS both require segmented financial data to be included in annual reports, but they do not specifically require the same method to be used for internal and external segment reporting. There is no incentive for companies to use the contribution margin format in segment reporting. The use of different accounting methods and reporting formats can create reconciliation problems.

Step-by-step explanation:

GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) rules have some similarities and differences regarding segment reporting.

• Both GAAP and IFRS require segmented financial data to be included in annual reports. This means that companies need to disclose information about their operating segments in their financial statements.
• However, GAAP and IFRS do not specifically require that the same method be used for both internal and external segment reporting. Internal reporting focuses on management decision-making, and companies have some flexibility in choosing the method that best suits their needs. External reporting, on the other hand, needs to adhere to the requirements of GAAP or IFRS.
• There is no specific requirement in GAAP or IFRS that creates incentives for companies to use the contribution margin format in segment reporting. The choice of reporting format depends on the company's industry, nature of operations, and management preferences.
• Lastly, the use of different accounting methods and reporting formats can indeed create problems in reconciling internal and external reports. However, this is not a requirement stated by GAAP or IFRS but rather a challenge that companies may face.

Answer 2

The correct options are "A, C, and D".

Step-by-step explanation:

• GAAP becomes regarded as a relatively 'rules-based' management framework, seems to be the accounting technique used throughout the United States
• IFRS becomes quite 'principles-based', although this would be the accounting framework used in more than 110 countries throughout the globe.
• These allow the same approach being used for international and domestic section reporting, which generate reconciliation issues.