Segment reporting can provide useful information for investors and competitors.Segment disclosures could result in competitive harm for the company making the disclosures.By analyzing segment information, potential competitors can identify and concentrate on the more successful areas of a disclosing company's business.Indeed, the FASB recognized competitive harm as an issue of concern for companies disclosing segment information.In developing the current segment reporting guidelines, the FASB considered but ultimately decided not to provide companies an exemption from providing segment information if they believed that doing so would result in competitive harm.The FASB believed that such an exemption would be inappropriate because it would provide a means for broad non-compliance with the standard.

The previous segment reporting standard required geographic segments with 10% or more of total firm revenues, operating profit, or identifiable assets to be reported separately.In contrast, the current guidelines require disclosures to be provided by country when revenues or long-lived assets in an individual country are material.However, U.S. GAAP does not specify what is material for this purpose but leaves this to management judgment.Some commentators have expressed a concern that firms might use high materiality thresholds to avoid making individual country disclosures, perhaps to avoid potential competitive harm.Anecdotally, the very different levels of disclosure provided in 2012 by IBM and DuPont suggest that companies define materiality differently.

Please respond to the following:

• What factors might a company consider in determining whether an individual foreign country is material to its operations?
• Based on the factors you identified, which of the factors would you consider to be most influential?Why?
• Should U.S. GAAP require a percentage test to determine when an individual country is material?