FASB proposes improvements to reporting of a discontinued operation

FASB proposed a new staff position to improve the quality and consistency of financial reporting. It defines a discontinued operation and establishes disclosure requirements for all components of an entity that have been disposed of or are classified as held for sale.

The FASB Staff Position (FSP) FAS 144-d, Amending the Criteria for Reporting a Discontinued Operation, is open for comment until Jan. 23, 2009.

The proposed FSP would amend the definition of a discontinued operation as a component of an entity that is (a) an operating segment and either has been disposed of or is classified as held for sale or (b) a business or a nonprofit activity that meets the criteria to be classified as held for sale on acquisition. It would thus establish when the income effects of a component of an entity would be reported in the discontinued operations section of the income statement under FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

The FSP also would amend the disclosure requirements of Statement 144 for all components of an entity that either have been disposed of or are classified as held for sale regardless of whether a component of an entity is reported in the income statement as a discontinued operation or in continuing operations.

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