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Chapter 5 — Discontinued Operations

5.2 Criteria for Reporting a Discontinued Operation

5.2 Criteria for Reporting a Discontinued Operation

ASC 205-20
What Is a Discontinued Operation?
45-1A A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity.
A Discontinued Operation Comprising a Component or a Group of Components of an Entity
45-1B A disposal of a component of an entity or a group of components of an entity shall 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 any of the following occurs:
  1. The component of an entity or group of components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale.
  2. The component of an entity or group of components of an entity is disposed of by sale.
  3. The component of an entity or group of components of an entity is disposed of other than by sale in accordance with paragraph 360-10-45-15 (for example, by abandonment or in a distribution to owners in a spinoff).
45-1C Examples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity (see paragraphs 205-20-55-83 through 55-101 for Examples).