Benefits of using Segments??

Question

Hi All,
We are planning to use segments for one of our scenarios... As per my understanding segments can be derived from profit center...but i want to understand wat purpose does segment serves? We already have the functionality of Business Areas...
So i just wanted to understand what benefits segments offer over Business Area.
Thanks and regards,
Ankur

Answer 1

Hello
Check this
Segment
Definition
Division of a company for which you can create financial statements for external reporting.
Use
The accounting principles US GAAP and IFRS require companies to perform segment reporting. You can define segments in your SAP system for this purpose. You find the appropriate IMG activity in Customizing under Enterprise Structure ® Definition ® Financial Accounting ® Define Segment.
You can enter a segment in the master record of a profit center. The characteristic Segment is only released in combination with the characteristic Profit Center. If no segment is specified manually during posting (only possible for transactions in Financial Accounting), the segment is determined from the master record of the profit center. This profit center can also be assigned manually or derived.
If you want to apply different rules to derive the segment during posting, you can define your own rules for this. You find the corresponding settings in Customizing under Financial Accounting (New) ® Financial Accounting Global Settings (New) ® Tools ® Customer Enhancements ® Business Add-Ins (BAdIs) ® Segment Derivation.
The document splitting procedure is the prerequisite for creating financial statements at any time for the Segment dimension. For this, you need to set up a zero balance setting for the Segment characteristic. You find the document splitting settings in Customizing under General Ledger Accounting (New) ® Business Transactions ® Document Splitting.
Structure
US GAAP and IAS set out different requirements regarding segment reporting:
US GAAP requires a virtually complete balance sheet at the segment level for segment reporting (essentially everything apart from stockholders' equity). The segment is defined as a subarea of a company with activities that generate expenses and revenues, with an operating result that is regularly used by management for profit assessment and resource allocation purposes, and for which separate financial data is available.
You can use the Segment dimension to represent the segment levels.
IAS requires for segment reporting primary and secondary segmentation, which have different reporting depth. A distinction is made between the following types of segment:
·        Business segment
A business segment is a distinguishable subactivity of a company that relates to the manufacture of a product or the provision of a service and that has risks and revenues that differ from those in other business segments.
·        Geographical segment
A geographical segment is a distinguishable subactivity of a company that relates to the manufacture of a product or the provision of a service within a specific field of business. The risks and revenues of a geographical segment differ from the subactivities in other fields of business.
You can choose which segment type you want to have as the primary or the secondary segmentation. You can use the Segment dimension for the primary segmentation. You can represent the secondary segmentation in your system. You can do this by including a user-defined field Region in your general ledger accounting, for example.
Regards