Discontinued_operations_slides

Discontinued_operations_slides - Discontinued operations...

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Discontinued operations
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Discontinued operations Page 2 Typical coverage of US GAAP Criteria for classification as non-current assets held for sale Criteria for classification as discontinued operations Valuation of discontinued operations Impact on depreciation Presentation of discontinued operations: Impact on comparative financial statements: Balance sheet presentation Income statement presentation Cash flow presentation Treatment when no longer qualified as a non-current asset held for sale
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Discontinued operations Page 3 Executive summary Under both IFRS and US GAAP, a discontinued operation represents a component of an entity that has been disposed of or is held for sale. In the 2009 edition of the AICPA’s Accounting Trends and Techniques , of the 500 companies surveyed, 76 companies reported discontinued operations. IFRS narrowly defines what qualifies as a discontinued operation. US GAAP more broadly defines discontinued operations and could include asset groups smaller than those allowed under IFRS. ASC 205-20-45-1 also requires that: “(a) the operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction and (b) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.” There is no similar requirement in IFRS.
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Discontinued operations Page 4 Executive summary There are differences in the presentation of discontinued operations: Balance sheet – IFRS does not require restatement of comparative information, while US GAAP does not provide any specific guidance on comparative information. Income statement – IFRS requires more extensive disclosures than US GAAP. Cash flows – IFRS 5.33 requires comparative disclosure of “the net cash flows attributable to the operating, investing and financing activities,” while US GAAP does not have a similar requirement.
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Discontinued operations Page 5 Primary pronouncements US GAAP ASC 205-20, Discontinued Operations ASC 360, Property, Plant, and Equipment IFRS IFRS 5, non-current Assets Held for Sale and Discontinued Operations IAS 36, Impairment of Assets
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Discontinued operations Page 6 Progress on convergence In September 2008, the Boards issued proposed amendments to ASC 205-20 and IFRS 5 to converge the definition of discontinued operations as well as the related disclosure requirements. The comment period on the exposure draft ended on January 23, 2009. The Boards have re-exposed the proposed standard and expect to issue a final draft later in 2010 . Based on tentative decisions to date, the Boards have decided to adopt a common definition of a discontinued operation that is based on the current definition in IFRS 5.
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This note was uploaded on 09/30/2010 for the course ACCT 3311 taught by Professor Gregsommers during the Spring '10 term at Southern Methodist.

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Discontinued_operations_slides - Discontinued operations...

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