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Handbook: Discontinued operations & HFS disposal groups
Handbook | March 2024
Latest edition: Our in-depth guide to ASC 205-20 and held-for-sale disposal groups under ASC 360-10.
KPMG explains when and how to apply the discontinued operations guidance in ASC 205-20 and held-for-sale guidance in ASC 360-10. The latest edition adds new guidance on the assignment of goodwill to a disposal group, the elimination of intercompany balances with a discontinued operation and other presentation matters.
Applicability
- All companies with operations that may be discontinued or long-lived assets that may be sold or otherwise disposed of.
Relevant dates
- Effective immediately
A significant shift in operations
The reporting of discontinued operations signals that, through a disposal transaction, an entity is undertaking a strategic shift of significance to its operations and financial results. It shows the financial effect of such a shift to the users of the entity’s financial statements – allowing them to better understand continuing operations.
The underlying principles in ASC 205-20 evolved with the issuance of ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.
The FASB narrowed the types of disposals that are reported in discontinued operations to exclude from the presentation requirement routine transactions that do not change the entity’s strategy. The current definition of discontinued operations reduces the burden on preparers, but disclosures remain extensive – in particular for significant disposals that do not qualify as discontinued operations.
This Handbook provides an in-depth look at the classification of operations that have been or will be disposed of. We have organized our discussion so that each step in the classification process is analyzed to make it easier to identify how a disposal should ultimately be presented and disclosed; for areas where the guidance is unclear, we have provided our position. We hope that this publication will be useful in properly reporting discontinued operations.
Report contents
- Component of an entity
- Disposed of or held-for-sale
- Strategic shift test
- Presentation of discontinued operations
- Disclosure of discontinued operations
- Measurement of held-for-sale disposal groups
- Presentation and disclosure of held-for-sale disposal groups that are not discontinued operations
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Discontinued operations and held-for-sale disposal groups
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KPMG professionals provide a refresher on the discontinued operations and held-for-sale (HFS) guidance, including key SEC requirements and trends.
In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues.
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Presentation of Financial Statements, ASC 205
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Related Posts
Lower of cost or market (lcm), property, plant and equipment, asc 360.
ASC 205 PRESENTATION OF FINANCIAL STATEMENTS
IMAGES
COMMENTS
Once the debits and credits have been settled, presentation and disclosure is how that information is conveyed to financial statement users in a transparent, understandable and consistent manner. Disclosure goes 'behind the numbers' and is necessary to fully understand the financial statements. ASC 205 to 280 in the FASB's Accounting ...
ASC 205-10-45-1A. A full set of financial statements for a period shall show all of the following: Financial position at the end of the period ; Earnings (net income) for the period, (which may be presented as a separate statement or within a continuous statement of comprehensive income [see paragraph 220-10-45-1A])
Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements — Discontinued Operations, provides guidance on the presentation and disclosure of discontinued operations, including criteria for determining when the presentation of discontinued operations is appropriate. Separate reporting of discontinued operations is ...
205-20-65-1 The following represents the transition and effective date information related to Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity:
View the article/chapter PDF and any associated supplements and figures for a period of 48 hours. ... This chapter focuses on the importance of the presentation of financial statements. ASC 205-10-45-1 explains that the presentation of comparative financial statements in annual reports enhances the usefulness of such reports and brings out more ...
This chapter provides clear explanations and practical examples for real-world application of ASC 205, Presentation of Financial Statements. It includes relevant sources of GAAP and expert guidance on interpretation, terminology, relevant concepts, and applicable rules, while in-depth discussion on the issues surrounding specific pronouncements offers informative perspective for a variety of ...
Summary. Accounting Standards Codification (ASC) 205, Presentation of Financial Statements, is divided into ASC 205-10, ASC 205-20 and ASC 205-30. ASC 205-10 emphasizes the value of comparative financial statements. ASC 205-20 includes providing guidance on reporting the results of operations when a component of an entity has been disposed of ...
This white paper provides an overview of the discontinued operations guidance in Subtopic 205-20, Presentation of Financial Statements - Discontinued Operations, of the FASB's Accounting Standards Codification (ASC), as well as an appendix that provides a tabular presentation of the related disclosure requirements.
Accounting Standards Update No. 2014-15. August 2014. Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. An Amendment of the FASB Accounting Standards Codification®. The FASB Accounting Standards Codification® is the source of ...
Accounting Standards Codification—What You Get. Pending Content System for filtering pending content display based on user profile. Browsing by Topic, Searching, and Go To navigation. Show All in One Page feature for viewing user-selected excerpts. Cross Reference report and archive to locate and access legacy standards.
These comparative financial statements allow investment analysts and other interested readers to perform comparative analysis of pertinent information. ASC 205-10-45-1 explains that the presentation of comparative financial statements in annual reports enhances the usefulness of such reports and brings out more clearly the nature and trends of ...
It shows the financial effect of such a shift to the users of the entity's financial statements - allowing them to better understand continuing operations. The underlying principles in ASC 205-20 evolved with the issuance of ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.
Presentation of Financial Statements, ASC 205. February 9, 2018 accta. Presentation of Financial Statements. Financial Statements. 1. Balance Sheet -> Topic 210 2. Income Statement -> Topic 215 3. Statement of Cash Flows -> Topic 230 4. Statement of Shareholder Equity -> Topic 215 5. Notes to Financial Statements -> Topic 235
Excerpt from ASC 205-20-45-10. In the period(s) that a discontinued operation is classified as held for sale and for all prior periods presented, the assets and liabilities of the discontinued operation shall be presented separately in the asset and liability sections, respectively, of the statement of financial position.
Rule 4-04: Omission of substantially identical notes. Rule 4-08: General notes to financial statements. Commercial and Industrial Companies. Rule 5-01: Application of rules 5-01 to 5-04. Rule 5-02: Balance sheets. Rule 5-03: Income statements. Interim Financial Statements. Rule 10-01: Interim financial statements.
The chapter explains that the presentation of comparative financial statements in annual reports enhances the usefulness of such reports and brings out more clearly the nature and trends of current changes affecting the enterprise. It also emphasizes the principle of comparability and the importance of consistency to comparability.
This chapter explains the presentation of financial statements and its four main subtopics: ASC 205-10, Overall; ASC 205-20, Discontinued Operations; ASC 205-30, Liquidation Basis of Accounting; and ASC 204-40, Going Concern. It provides definition of terms included in ASC 205, discusses its perspectives and issues, and talks about its concepts, rules, and examples.
ASC 205, Presentation of Financial Statements, and ASC 210, Balance Sheet, provide authoritative guidance for presentation of the balance sheet for all US GAAP reporting entities. These rules closely align with SEC regulations, except for certain circumstances in which the SEC prescribes incremental requirements.
ASC 205 emphasizes the principle of comparability and the importance of consistency to comparability. ASC 205-10-45-1 explains that the presentation of comparative financial statements in annual reports enhances the usefulness of annual reports and brings out more clearly the nature and trends of current changes affecting the enterprise ...
Summary. Accounting Standards Codification (ASC) 205, Presentation of Financial Statements, is divided into four subtopics: ASC 205-10, overall; ASC 205-20, discontinued operations; ASC 205-30, liquidation basis of accounting; and ASC 205-40, going concern. The guidance in ASC 205-10 applies to: all subtopics in ASC 205-10 unless explicitly ...
ASC 205-30 does not consider the length of time the liquidation process could take as a factor in determining when the imminent threshold has been met. A reporting entity is required to adopt the liquidation basis of accounting as soon as its liquidation meets the definition of imminent, even if the actual liquidation event is 12 months or more in the future (or extends beyond the plan year in ...