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FASB discusses reporting discontinued operations and technical corrections

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Nov 15, 2013

At its November 13, 2013, meeting, the FASB discussed feedback from constituents on Proposed Accounting Standards Updates (ASUs), “Reporting Discontinued Operations,” and “Technical Corrections and Improvements Related to Glossary Terms.” In addition, the Board redeliberated various aspects of those respective projects. The Board decided to direct the staff to draft a final ASU on both projects.

Key issues discussed during the meeting include the following:

 

Reporting discontinued operations

IssueDecision
Scope All entities using the full cost method of accounting for oil and gas properties should apply the guidance for reporting discontinued operations.
Definition of a discontinued operation

Operations of a component of an entity or group of components that (1) have been disposed of, or categorized as held-for-sale, as a group in a single transaction and (2) represent a strategic shift affecting financial results should be reported as discontinued operations.

An acquired business classified as held-for-sale on acquisition should be reported as discontinued operation.

Include additional implementation guidance and illustrations on what establishes a disposal of a component within the definition of discontinued operation.

Continuing involvement Continuing involvement criterion to be removed from the definition of discontinued operation.
Disclosures New disclosure requirements added.
Reclassifying assets and liabilities Entities should reclassify assets and liabilities of a discontinued operation for all prior periods.
Transition and effective date The final ASU should be applied:
  • Public entities: prospectively to all disposals occurring for annual periods beginning on or after December 15, 2014, and interim periods within that year.
  • Nonpublic entities: prospectively to all disposals occurring for annual periods ending on or after December 15, 2015, and interim periods within that year.

 

Technical corrections and improvements related to glossary terms

IssueDecision
Pension-related glossary terms Retained certain pension-related terms in order to avoid changes in practice if amended.
Duplicate “fair value” terms

Excluded the proposed changes to duplicate “fair value” terms in shared-based payments and FASB 157 from the scope of the final standard.

Additional research will be conducted by the staff on duplicate “fair value” terms not included in the proposed amendments.

Transition and effective date

The proposed amendments will not result in any significant changes in practice of current U.S. GAAP; therefore, no transition guidance is needed.

Amendments will become effective on the issuance of a final standard that is expected in the first quarter of 2014.

For additional information, please see:

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.