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FASB Proposes Improvements to Reporting Discontinued Operations


April 2, 2013 (SmartPros) The Financial Accounting Standards Board recently issued for public comment its 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.



Proposed Accounting Standards Update, Presentation of Financial Statements (Topic 205)--Reporting Discontinued Operations, re-defines "discontinued operation" and would require organizations to provide additional disclosures about discontinued operations such as operating, investing and financing cash flows. Stakeholders are asked to review and provide comments on the proposal by August 30, 2013.

"Investors have raised concerns that for certain industries too many disposals of assets qualify for discontinued operations presentation under current standards, resulting in financial statements that are less relevant and more costly to prepare," stated FASB Chairman Leslie F. Seidman. "The Board is seeking stakeholder input on changes intended to capture only those disposals that represent major strategic shifts as discontinued operations and to provide enhanced disclosures about the financial effects of discontinued operations and other disposals of significant components of an organization."

In addition to amending the definition of discontinued operations, the amendments in this proposed Update would require additional disclosures about discontinued operations and other disposals of individually material components of an organization that do not qualify for discontinued operations presentation in the financial statements.

The proposed amendments also would expand the disclosures about an organization's continuing involvement with a discontinued operation. Those continuing involvement disclosures would be required until the results of operations of the discontinued operation are no longer separately presented in the statement where net income is reported (either in a single continuous statement of comprehensive income or into separate but consecutive statements).

Finally, the proposed guidance would achieve greater convergence with the requirements for reporting discontinued operations with International Financial Reporting Standards (IFRS) 5, Non-current Assets Held for Sale and Discontinued Operations.

The Exposure Draft, including instructions on how to submit written comments, is available at www.fasb.org. A FASB In Focus on the exposure document is also available at the FASB website.

SmartPros Ltd. 2013

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