Pepsico Segment Reporting Analysis
Pepsi reports segment information by a combination of line of business and geographic location, and so does Coca-Cola. The company has identified six reportable segments, which are Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), PepsiCo Americas Beverages (PAB), Europe, and Asia, Middle East & Africa (AMEA). Its best-known competitor, Coca-Cola, identified seven reportable segments: Eurasia and Africa; Europe; Latin America; North America; Pacific; Bottling Investments; and Corporate.
Why does …show more content…
Why did FASB allow segment information to be prepared and disclosed on a non-GAAP basis? In other words, what is the justification for allowing departures from GAAP?
FASB ruled that the information to be reported about each segment should be measured on the same basis as the information used by the chief operating decision maker for purposes of allocating resources to segments and assessing segments' performance. There are several justifications for allowing departures from generally accepted accounting principles. First, reporting segment information in accordance with the generally accepted accounting principles used at the consolidated level would be very difficult since some of those principles are not intended to be applied at the segment level; one example being accounting for cost of enterprise-wide employee benefit plans. Another justification is the fact that there are no generally accepted principles for allocating joint costs, jointly used assets, or jointly incurred liabilities to segments or for pricing intersegment transfers. In conclusion, it is not practical, and sometimes downright impossible, to present segment