5.7 Consideration of Subsequent Events in the Assessment of Discontinued-Operations Presentation
ASU 2014-08 (codified in ASC 205-20) deleted the previous guidance, under which
the evaluation of whether a disposal qualified for
discontinued-operations presentation took into account events that
occurred after the balance sheet date but before the financial
statements were issued or were available to be issued. This previous
guidance was inconsistent with the guidance in ASC 360-10-45-13,
which indicates that the evaluation of whether a component meets the
held-for-sale criteria is performed as of the balance sheet date
(see Section
3.10). Therefore, entities should determine
whether the held-for-sale criteria and the discontinued-operations
reporting criteria are met as of the balance sheet date. Those
determinations are not affected by events that occur after the
balance sheet date but before the financial statements are issued or
are available to be issued.
Under ASC 205-20-50-3, in the period in which an entity changes its plan for
selling a discontinued operation, the entity must disclose in the
notes to the financial statements “a description of the facts and
circumstances leading to the decision to change that plan and the
change’s effect on the results of operations for the period and any
prior periods presented.” We believe that if the entity decides not
to sell a component after the balance sheet date but before the
financial statements are issued or are available to be issued, the
entity should consider providing the disclosures required by ASC
205-20-50-3 (see Section 7.7.1) about its change in plan.