As noted in Chapter 5, in the period in which a component meets the criteria in ASC 205-20 for presentation as a discontinued operation, a registrant must present the component as a discontinued operation retrospectively for all prior periods presented. Accordingly, SEC registrants must consider the impact of the retrospective change on the historical financial statements included in their Exchange Act reports (e.g., Forms 10-K and 10-Q), registration statements under the Securities Act (e.g., registration statements on Form S-3), and other nonpublic offerings. Registrants may also be required to report a disposition, including certain disposals that do not qualify as discontinued operations,1 on a Form 8-K and provide pro forma financial information that gives effect to the disposition. Further, registrants must consider the impact the revised financial statements may have on other SEC requirements (e.g., SEC Regulation S-X, Rules 3-05, 3-09, 4-08(g), and 3-10). In addition, registrants undertaking an initial public offering may be able to consider using a “to-be-issued” accountant’s report in certain specific circumstances.
When either a subsidiary is deconsolidated or a group of assets is derecognized, SEC registrants may be required to report the deconsolidation or derecognition on a Form 8-K and provide pro forma financial information that gives effect to the deconsolidation or derecognition. For more information, see Section F.4 of Deloitte’s Roadmap Consolidation — Identifying a Controlling Financial Interest.