Proposed FSP on Discontinued Operations
A proposed staff position would require an entity to report fewer activities as discontinued operations. If adopted the FSP would be effective for fiscal years beginning after December 15, 2009 and would be applied retrospectively. A final FSP is expected in 2009.
The proposed staff position would define a discontinued operation as an operating segment as defined in FAS 131 that has been disposed of or is classified as held for sale or a business as defined in FAS 141(R) that meets the criteria to be classified as held for sale on acquisition.
A reporting unit, a subsidiary, or an asset group that is not an operating segment would no longer be classified as a discontinued operation unless it qualifies as a business held for sale on acquisition.
The following disclosures would also be required:
1. A description of the facts and circumstances leading to the expected disposal and the expected manner and timing of the disposal.
2. The gain or loss recognized.
3. The carrying amount of major classes of assets and liabilities.
4. The profit or loss, major income and expense items constituting that profit or loss, and whether the profit or loss is presented in continuing or discontinued operations.
5. Major classes of cash flows.
6. A reconciliation of amounts disclosed in the notes with amounts presented separately on the face of the financial statements as held for sale and as discontinued operations.
7. The segment in which the component is reported under Statement 131.
This FSP would cause a lot of changes and since it is applied retrospectively, it could also involve a lot of work to restate previous years. Stay tuned to see if this one gets approved.
Linda is a CPA living in Southwestern Ohio, working as a research accountant for an investor-owned publicly traded utility company. She specializes in implementing new FASB and SEC requirements and FAS 133 derivative issues. In her role at the utility she has encountered many issues and written many memos, so send in your implementation and derivative issues and Linda will help figure out an answer.