The Financial Accounting Standards Board (FASB) has issued a proposal to improve financial reporting about discontinued operations of major business lines or major geographic areas of operations for public and private companies, and not-for-profit organizations.
This proposed Accounting Standards Update (ASU) is titled, Presentation of Financial Statements (Topic 205)—Reporting Discontinued Operations.
The amendments in this proposed ASU would affect an entity that has either of the following:
- A component of an entity that either is disposed of or meets all of the criteria in Accounting Standards Codification (ASC) 360-10-45-9 of Topic 360, Property, Plant, and Equipment, to be classified as held for sale
- A business that, on acquisition, meets all of the criteria in ASC 360-10-45-9 to be classified as held for sale.
Further, the amendments in this proposed ASU would change the requirements for reporting discontinued operations in Topic 205, which would increase convergence of the requirements for reporting discontinued operations in Topic 205 and IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. A discontinued operation would be either of the following:
A component of an entity or a group of components of an entity that represents a separate major line of business or major geographical area of operations that either has been disposed of or is part of a single coordinated plan to be classified as held for sale in accordance with the criteria in ASC 360-10-45-9
A business that, on acquisition, meets the criteria in ASC 360-10-45-9 to be classified as held for sale
The amendments in this proposed ASU would also require additional disclosures about discontinued operations. In addition, public and non-public entities would be required to provide disclosures about a disposal of an individually material component of an entity that does not qualify for discontinued operations presentation in the financial statements.
Those disclosures would be required until the results of operations of the discontinued operation in which an entity retains continuing involvement are no longer separately presented in the statement where net income is reported.
Comments on this proposed ASU are due August 30, 2013. The full text of the proposed ASU can be found by clicking here.
Readers should not act upon information presented without individual professional consultation.
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