Project Updates
Reporting Discontinued Operations
Last Updated: May 27, 2008 (Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
*Project Objective
*Decisions Reached at the Last Meeting
*Next Steps
*Summary of Decisions Reached to Date
*Board/Other Public Meeting Dates
*Background Information
Contact Information
*Project Objective
The objective of this project is to develop a converged definition of a discontinued operation with the IASB along with converged disclosure requirements for all components of an entity that have been (or will be) disposed of.
*Decisions Reached at the Last Meeting
See Action Alert.
*Summary of Decisions Reached to Date
Scope
The Boards decided that the guidance on reporting a discontinued operation and on additional disclosures for components of an entity that have been or will be disposed of should be separated from the financial statement presentation project.
Initial and subsequent measurement
The Board tentatively agreed to the following converged definition of discontinued operations:
A component of an entity that has been (or will be) disposed of and meets the definition of an operating segment under FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, would be reported as a discontinued operation on the face of the financial statements.
However, the Board subsequently decided to revise the above definition of discontinued operations to include newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition. The Board also supported clarifying that the operating segment criterion is a classification criterion and not a measurement criterion.
Disclosure
The Board approved the following disclosures for all components of an entity that have been (or will be) disposed of, including those reported as a discontinued operation:
- The major classes of revenues and expenses, including impairments, interest, depreciation and amortization
- If a parent has one or more less-than-wholly-owned subsidiaries, net income or loss attributable to the parent
- The major classes of cash flows (operating, investing, and financing)
- The major classes of assets and liabilities
- The nature of the disposal activities and the use of the proceeds from the disposal activities.
Effective Date and Transition
The Board decided that the amendments to FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, related to discontinued operations should be effective for financial statements issued for fiscal years beginning after December 15, 2009, and interim periods within those years. Earlier adoption will be permitted. The Board also decided that the amendments to Statement 144 related to discontinued operations should be applied retrospectively to all periods presented. The Board supported a 120-day comment period for the proposed FSP.
*Next Steps
The Board plans to meet in the second quarter to confirm the tentative decisions reached to date and discuss the remaining issues that need to be addressed prior to the staff preparing an exposure draft.
The staff expects to issue an exposure draft early in the third quarter of 2008.
*Board/Other Public Meeting Dates
The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final Statement, Interpretation, FSP, or Statement 133 Implementation Issue.
| *May 14, 2008 |
Board Meeting—Decisions related to the definition of Discontinued Operations, required disclosures for all components of an entity that have been (or will be) disposed of, effective date and transition, and proposed FSP comment period |
| April 18, 2007 |
Board Meeting—Agenda Decision |
| January 24, 2007 |
Board Meeting—Financial Statement Presentation: Discontinued Operations |
*Background Information
At its January 24, 2007 meeting on the financial statement presentation project, the Board agreed to revise the definition of a discontinued operation in FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. It also decided to require an entity to provide additional disclosures when reporting the disposal (or future disposal) of a component of the entity. At the January 25, 2007 IASB Board meeting, the IASB agreed to converge with the FASB’s revised definition of a discontinued operation.
During the deliberations leading to the revised definition, the Board asked the staff to research the amount of the staff’s and the Board’s time necessary to create a separate project for this issue, effectively removing it from the scope of the financial statement presentation project. In February 2007, the staff received six letters from constituents, including NAREIT, in support of the revised definition and asked the IASB and the FASB to issue the revised guidance on an accelerated basis. In April 2007, the FASB and IASB Boards agreed to address the guidance for reporting discontinued operations and any related disclosure issues separately from the financial statement presentation project.
Contact Information
David Leverenz
Industry Fellow
dcleverenz@fasb.org
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