The FASB’s proposed new rule trying to tighten segment disclosures does not go far enough although segment disclosures are hugely important to investors and citizens.
Segment disclosure is a nerdy topic that will not get me many clicks on this story beyond the die-hard followers of the twists and turns of financial reporting developments in the US. But it’s a hugely important area that overlaps with many policy issues of the day including antitrust action, capital allocation and how to value a conglomerate. The key question that I want an answer to, as a reader of financial statements: what are the unit economics of a product or a segment? Unit economics is jargon for revenue and cost per unit of a product or service sold. This question becomes even more complicated when bundling of products or services is involved. Consider a few examples.
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