Fasb Is3350 Unit 2 Assignment

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FASB issued an update to the guidance for reporting on discontinued operations that requires the disclosure of disposals of components of an entity. In April 2014, FASB published ASU 2014-08 that revised the definition of a discontinued operation found in FASB ASC 205-20. The ASU 2014-08 also highlighted the need for additional disclosures about disposal transactions that do not fall under the criteria for discontinued operations. Therefore, any entity that follows U.S. GAAP is affected by the modified guidance and is expected to change its identification and disclosures about disposal transactions. The purpose of ASU 2014-08 was to provide clients with more useful information when making decisions. The ASU was also issued “to elevate the threshold for a disposal transaction to qualify as a discontinued operation” (Morris and Velenand, 2014). A higher threshold would eliminate the excessive disposal transactions that were meeting the criteria of discontinued operations under the current guidance. Under the current guidance in …show more content…
Therefore, as per FASB ASC 205-20-65-1, if a discontinued operation includes an equity method investment, or a business or nonprofit activity that is classified as held for sale on acquisition, a more limited set of disclosures is required. The assets and liabilities of discontinued operations that are held for sale must be measured identical to other assets that are held for sale. However, “all initial or subsequent adjustments to the carrying value of the discontinued operation as a result of such measurement” that meet the requirements of the new guidance must be classified in discontinued operations (EY, 2015). When disposals of components of an entity do not meet the criteria of a discontinued operation, the disposals are within the scope of ASC 360-10 and must be disposed of

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