Accounting Research Tool
Appendix F — Deconsolidation/Derecognition

F.4 Parent’s Disclosures Upon Deconsolidation of a Subsidiary

F.4 Parent’s Disclosures and SEC Reporting Considerations Upon Deconsolidation of a Subsidiary

ASC 810-10-50-1B provides the following disclosure requirements for a parent that deconsolidates a subsidiary:


The definition of a business for SEC purposes is outlined in SEC Regulation S-X, Rule 11-01(d). This definition can differ from the definition in accounting literature, including that in ASC 805-10.
Under Rule 11-01(b), a disposed-of business is significant if the business to be disposed of meets the conditions for a significant subsidiary in Regulation S-X, Rule 1-02(w), in accordance with any of the significance tests.
Instruction 4 of Item 2.01 indicates that if either of the following exceeds 10 percent of the registrant’s consolidated assets, the disposition of assets would be considered significant: (1) the equity in the net book value of the assets or (2) the amount paid that is received for the assets upon disposition.
A Form 8-K may also be required under Item 1.01 when a registrant has entered into a material definitive agreement for a disposition (e.g., when it executes a contract to dispose of the assets or business). An Item 1.01 Form 8-K is generally filed earlier than an Item 2.01 Form 8-K, which is not required until the disposition is consummated. Since Item 2.01 triggers a requirement to provide financial statements in accordance with Item 9.01 (typically pro forma financial statements), such financial statements are not required in the Item 1.01 Form 8-K. Registrants may wish to consult with their legal advisers regarding these requirements.
If a registrant is soliciting authorization for a disposal of a significant business in a proxy statement, unaudited financial statements of the business to be disposed of for each of the two most recent fiscal years (audited if available) and the appropriate unaudited interim periods should be provided. See paragraphs 1140.6 and 2120.2 of the FRM.
See footnote 4.