With the integration of the world economy, the scope of activities of enterprises has no longer been restricted by the state and the region and has gone global. A considerable number of enterprises including Pepsi have become enterprise groups that operate across industries and regions. The corresponding consolidated accounting statements can more fully reflect the economic resources directly or indirectly controlled by the parent company and the overall financial situation and operating results of the entire enterprise group, but meet the goal of serving the decision-making needs of information users (Flood, 2015). There are still limitations. For the inherent shortcomings of the consolidated statements, the internationally accepted solution is to disclose the segment information and supplement it as a consolidated statement.
In order to standardize the disclosure of segment information, national accounting standards setting bodies, securities management departments and relevant international organizations have issued guidelines or systems, the scope of application of segment information disclosure, the standards and quantity of divisions, the content of segment information. The reporting period and the disclosure method were formulated to form their respective segment information disclosure systems (Flood, 2015).
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The United States has extensive regulations on segment information disclosure. In 1969, the US Securities and Exchange Commission (SEC) first required listed companies to disclose company information in accordance with industry segments; in 1976, the Financial Accounting Standards Board (FASB) issued FASB-14 “Corporate Segment Financial Reports”; The FASB has successively released a series of accounting standards and technical announcements related to segment information, such as FASB-18, FASB-21, and FASB-24. These guidelines provide a normative guide to the disclosure of corporate segment information (Flood, 2015).
According to the above guidelines, the scope of disclosure of segment information is limited to publicly held listed companies. Enterprises should divide the division into four categories according to industry, major customers, foreign operations and export sales. The judgment criteria of the reportable industry segment are: segment revenue, operating profit(or loss), identifiable assets accounted for 10% or more of the combined business income, consolidated operating profit (or loss), and consolidated identifiable assets, respectively. The judgment of the main customer segment is that its operating income accounts for 10% or more of the consolidated operating income. The judgment criteria of the foreign operation and export sales segment are: its operating income accounts for 10% or more of the consolidated operating income, or the assets account for 10% or more of the total combined assets. In addition, the number of divisions is also restricted, requiring all reportable segments to be derived from non-related customers' consolidated operating income, which is at least 75% of the corresponding combined operating income of all industry segments, but the segments that should be reported are not at most More than 10. The content of the segment information required to be disclosed is: industry segments should disclose revenue, profitability, identifiable assets and other information; foreign operations should disclose revenue. Operating profit and loss, identifiable assets information; export sales should disclose the sales revenue of the company from foreign countries to foreign non-affiliated enterprise customers according to the total amount of the region; major customers should disclose their sales one by one. For the reporting period of the segment, FASB-18 issued in 1977 stipulated that the company did not have to provide segment information in the interim financial report; and the Special Committee on Financial Reporting of the American Institute of Certified Public Accountants , established in April 1991, after research, considered The segment information should be disclosed in the interim report and it is recommended to provide segment information on a quarterly basis. The method of disclosure of segment information is to separately prepare segment reports and incorporate them into the enterprise financial statement system to form an integral part of the entire report.
The International Accounting Standards Board (IASC) issued the IAS in 1981, 14 “Financial Information by Division”, which was revised in 1997. From the content of the guidelines, IAS-14 is closer to the requirements of FASB-14 in the United States. The difference is that it only requires companies to disclose industry and regional segment information, and does not require disclosure of export sales and segment information of major customers. If the enterprise applies both the industry division and the regional division, one of them is required to be the first level and the other as the second level. Correspondingly, the first-level segment is required to be fully disclosed. The indicators that should be disclosed include: sales income or other operating income, results, the value of the assets used, the liabilities, the total cost of the current purchase of assets, and the current assets. The total amount of depreciation and amortization expenses, other important non-cash expenses, and related investment information. For the limited disclosure of the second-level segment, the indicators that should be disclosed include: the income from the external customers of the enterprise, the book value of the assets, and the total cost of assets of the current purchaser with a service life of more than one year.
However, for trade secret, the segment disclosure, Pepsi ought to apply the principle of appropriateness. This principle suggest that the information representation should be appropriate and sufficient, that is, the report user can learn the important information of the enterprise from the disclosed information, and protect the trade secrets, avoid the information that is not conducive to the development of the enterprise and the benefit of the competitors. When the management of the company believes that the content and form of the segment report are not in line with the company's interests, and the mandatory disclosure has adverse consequences for the company, if it may be used by competitors or customers, the company may disclose the segment. This means that since Pepsi is in competition wars with Coca Cola, it will be crucial to disclose the segment information and not all details related to future plans, future strategies and new innovation being adopted (Cespedes, 2009). Pepsi will rely on accounting standards such as FASB-18, FASB-21, and FASB-24 and IASC.
The recommendation is based on a number of principles and assumptions. Some of these principles are outlined below.
(1) Revealing that it is sufficient, systematic and complete
Asking the information provided by the report provider allows the user to understand the full picture of the business, the nature of the event, and the outcome of the problem. There must be no major omissions in the disclosure of major events, otherwise it will result in the misunderstanding or misunderstanding of accounting information ( Müller-Marquès, 2018) .
(2) Principles of importance and relevance
The so-called importance principle refers to the choice of different disclosure methods for different information. The important information should be disclosed in detail and fully, and the general description should be brief. The criterion for judging the importance of summaries is mainly to look at the degree of correlation between accounting information and economic decision-making of report users ( Müller-Marquès, 2018) . The principle of relevance requires that the content of the information disclosed by the enterprise should have a feedback function. It should also have a testimony, and it should be timely in the time of disclosure. In case of sudden major events, an interim report should be provided in time to enable the user of the report. Get enough relevant information.
(3) Principle of true reliability
Only the accounting information of the real estate can play an effective role, otherwise it will harm the public interest. To this end, the source of information should be true and reliable, the information generation process should be scientific and reasonable, and the information should be properly and clearly expressed.
(4) The principle of appropriateness
The information representation should be appropriate and sufficient, that is, the report user can learn the important information of the enterprise from the disclosed information, and protect the trade secrets, avoid the information that is not conducive to the development of the enterprise and the benefit of the competitors ( Müller-Marquès, 2018) .
References
Cespedes, F. (2009). Cola wars: Going global. Harvard Business School Publishing. Retrieved from https://hbsp.harvard.edu/tu/9c34552b
Flood, J. M. (2015). Wiley GAAP 2015: Interpretation and Application of Generally Accepted Accounting Principles . Chichester, U.K: Wiley.
Müller-Marquès, B. T. (2018). IPSAS explained: A summary of international public sector accounting standards . Chichester, West Sussex, United Kingdom Wiley
