Acc/531 Week 2 Assignment

Satisfactory Essays
Too many disposals of small groups of assets that are recurring in nature qualify for discontinued operations under prior GAAP. This caused financial statements to be less decision useful for users. Additionally, the guidance on discontinued operations resulted in higher costs for preparers because it can be complex and difficult to apply. The FASB issued ASU 2014-08 to address those problems by changing the criteria for reporting discontinued operations, while simultaneously enhancing convergence with the International Accounting Standard Board’s reporting requirements for discontinued operations.
A disposal of a component of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component meets the criteria to be classified as held for sale (ASC 205-20-45-1E) or when the component is disposed of by sale.
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All other entities should apply the amendments prospectively to all disposals of components of an entity, and all businesses or nonprofit activities that, on acquisition, are classified as held for sale, that occur within annual periods beginning on or after December 15,2014 and interim periods within annual periods beginning on or after December 15,2015. (ASU 2014-08)
The amendments in this update improves the definition of discontinued operations, resulting in limited disposals. In effect, the financial statements will provide more
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