Situations in which aggregated data may be sufficient to evaluate the performance of an entity include:
A) Where the entity has not existed for a long period of time.
B) Where the segments of the entity have highly correlated profit prospects.
C) Where the entity has a large consolidated asset base.
D) Where the entity operates in different geographic areas with different risks.
E) None of the given answers.

Question

Quizplus · Accepted Answer

When the segments of an entity have highly correlated profit prospects, aggregating the data may be sufficient to evaluate the performance of the entity. In this case, the variations between segments are not significant, and the overall performance of the entity may be represented by the aggregated data. In contrast, in situations where the risks and characteristics of different segments are diverse, it may be necessary to evaluate their performance separately to gain a complete understanding of the entity.

Situations in Which Aggregated Data May Be Sufficient to Evaluate