STATEMENT OF THE ACCOUNTING PRINCIPLES BOARD
Disclosure of Supplemental Financial Information By Diversified Companies
1. Increasing attention is being given to the question of whether published reports of conglomerate companies should contain supplemental financial information concerning the ac-tivities of those segments of the business which are clearly sep-arable into different industry lines. The term conglomerate is used popularly to describe a company that diversifies into dis-tinctly different industries by acquisition or merger. The Board believes, however, that there is little distinction between indus-try diversification which arises by this method and industry diversification resulting from a company's own internal develop-ment and expansion efforts. All of these companies will be re-ferred to in this statement by the more descriptive term diversi-fied companies.
2. Disclosure of financial data relating to separable industry activities of a diversified company has not been considered essential for fair presentation of financial position and results of operations in conformity with generally accepted accounting principles. The Board recognizes, however, that financial report-ing practices are not static and should be responsive to changes in the business environment. The increase in industry diversifi-cation by business enterprises is one aspect of the changing business environment which indicates a need for reexamination of financial reporting practices.
Issued by the Accounting Principles Board of the American Institute of Certified Public Accountants
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