Blue Lagoon Inc., a publically-traded company, manufactures awide variety of scuba diving equipment and supplies, in addition toowning a chain of retail scuba stores and scuba diving trainingcenters. Eighteen months ago the company developed and began tomarket a new product line of oxygen tanks under various tradenames. Sales and profitability of this product line during thecurrent fiscal year greatly exceeded management's expectations. Thenew product line will account for 10 percent of the company's totalsales and 12 percent of the company's operating income for thisfiscal year. Additionally, Management believes sales and profitswill be significant for several years. Blue Lagoon is concernedthat its market share and competitive position may suffer if itdiscloses the volume and profitability of its new product line inits annual financial statements. Management is not sure how ASC 280applies in this case.
- Is Blue Lagoon required to report the Scuba Tank operations asa separate segment? Please justify your opinion.
- What options, if any, does Blue Lagoon, Inc. have with thedisclosure of its new product line? Be sure to explain your answerand support your conclusions with references to the authoritativeliterature.
