7.12 Recasting of Prior Periods Because of the Disposal of Part of an Operating Segment
ASC 280-10
55-7 If a reportable segment
meets the conditions in paragraphs 205-20-45-1A
through 45-1G to be reported in discontinued
operations, an entity is not required to also
disclose the information required by this
Subtopic. Paragraph 280-10-55-19 addresses whether
there is a need to recast previously reported
information if there is a disposal of a component
that was previously disclosed as a reportable
segment.
Pending
Content (Transition Guidance: ASC 280-10-65-1)
55-7
If a reportable segment meets the conditions in
paragraphs 205-20-45-1A through 45-1G to be
reported in discontinued operations, an entity is
not required to also disclose the information
required by this Subtopic. Paragraph 280-10-55-19
addresses whether there is a need to recast
previously reported information if there is a
disposal of a component that was previously
disclosed as a reportable segment.
55-19 Segment information for
prior periods for disposal of a component that was
previously disclosed as a reportable segment is
not required to be recast. However, if the income
statement and balance sheet information for the
discontinued component have been reclassified in
comparative financial statements, the segment
information for the discontinued component need
not be provided for those periods. Paragraph
280-10-55-7 addresses disclosure requirements if a
component of a public entity that is reported as a
discontinued operation is a reportable
segment.
Pending Content (Transition Guidance: ASC
280-10-65-1)
55-19 Segment information for prior
periods for disposal of a component that was
previously disclosed as a reportable segment is
not required to be recast. However, if the income
statement and balance sheet information for the
discontinued component have been reclassified in
comparative financial statements, the segment
information for the discontinued component need
not be provided for those periods. Paragraph
280-10-55-7 addresses disclosure requirements if a
component of a public entity that is reported as a
discontinued operation is a reportable
segment.
ASC 280-10-55-7 notes that when the discontinued operation is a reportable
segment, an entity is not required to separately disclose
information for the discontinued operation within the segment
footnote. However, if the discontinued operation is only a component
of a reportable segment, the entity should recast prior periods to
exclude the discontinued operation in the disclosures for the
reportable segment, beginning in the period in which the component
is presented as a discontinued operation.
We believe that the failure of a disposal to meet the criteria to be presented
as a discontinued operation would not be considered a change in an
entity’s internal organization that causes the composition of its
reportable segments to change. Accordingly, prior periods would not
need to be recast.
Example 7-9
Company A has identified the following reportable segments: computer hardware,
computer software, and customer service. Before
year-end, A disposed of a portion of its computer
hardware segment, and the disposal does not meet
the criteria to be presented as a discontinued
operation.
In preparing the current-year segment disclosures, A is not required to recast
prior-period segment information to remove the
portion of the computer hardware segment disposed
of before year-end or to quantify the effect in
the segment footnote.