Deloitte's Roadmap: Impairments and Disposals of Long-Lived Assets and Discontinued Operations

Preface

We are pleased to present the 2023 edition of Impairments and Disposals of Long-Lived Assets and Discontinued Operations. This Roadmap provides Deloitte’s insights into the guidance in ASC 360-101 and ASC 205-20 on impairments and disposals of long-lived assets and presentation of discontinued operations. ASC 360-10 specifies the accounting and reporting for long-lived assets that are being held and used by an entity and for long-lived assets that the entity intends to sell or otherwise dispose of. ASC 205-20 further provides guidance on when a component, or group of components, of an entity that is classified as held for sale or disposed of must be reported as a discontinued operation.

The body of this Roadmap combines the guidance in ASC 360-10 and ASC 205-20 on accounting and reporting for long-lived assets — as well as that on the presentation of disposals that both do and do not qualify for discontinued-operations reporting — with Deloitte’s interpretations and examples in a comprehensive, reader-friendly format. Further, the table of contents is a helpful navigational tool, providing links to topics and interpretations.

The 2023 edition of this Roadmap includes updated and expanded guidance. For a summary of key changes made to this Roadmap since publication of the 2022 edition, see Appendix D.

Be sure to check out On the Radar (also available as a stand-alone publication), which briefly summarizes emerging issues and trends related to the accounting and financial reporting topics addressed in the Roadmap.

We hope that you find this publication a valuable resource when accounting and reporting for disposals of long-lived assets and discontinued operations.

Footnotes

For a list of the titles of standards and other literature referred to in this publication, see Appendix B. For a list of abbreviations used in this publication, see Appendix C.

On the Radar

The convergence of various macroeconomic and geopolitical factors has created a volatile and uncertain environment in which a business’s ability to forecast results and make decisions can be difficult. Factors that have contributed to such challenges include bank failures or downgrades; businesses’ struggles to raise capital; companies’ announcements of layoffs, broader restructuring plans, impairments, and changes in customer behavior. As a result, the determinations business leaders may need to make regarding fixed asset impairments and disposals could be complex.

In evaluating whether they need to assess long-lived assets for impairment, financial statement preparers should consider the current and potential effects of factors such as interest rate increases, inflation, climate risk, and changes in the labor market. Further, how these factors may affect cash flow and fair value estimates used in impairment analysis should be considered. As businesses evolve in response to these conditions, preparers may also need to make determinations related to (1) assets held for sale and (2) reporting discontinued operations. Even as entities evolve in times of relative stability, they must consider the reporting for impairments and disposals.

Long-lived assets within the scope of ASC 360-10 are accounted for and tested for impairment differently depending on the entity’s intent regarding the assets. Long-lived assets that the entity intends to hold and use in its operations, including long-lived assets that the entity intends to abandon, distribute to owners, or exchange in a nonmonetary transaction accounted for at carrying amount, are tested for impairment when a triggering event occurs by performing a two-step recoverability test. In the two-step recoverability test, the carrying amount of an asset group is first compared with its undiscounted cash flows to determine whether an asset is recoverable. If the held-and-used asset group is determined not to be recoverable, the asset group is written down to fair value. By contrast, long-lived assets that the entity intends to sell are tested for impairment upon classification as held for sale and in each subsequent reporting period by comparing their carrying amount with their fair value less costs to sell.

The following flowchart summarizes how long-lived assets are accounted for and presented on the basis of the entity’s intent regarding the assets:

Long-Lived Assets Classified as Held and Used

Long-lived assets that are classified as held and used are tested for recoverability upon the occurrence of a triggering event, which is an event or change in circumstance that indicates that their carrying amount may not be recoverable. When performing a recoverability test, an entity groups long-lived assets with other assets and, possibly, liabilities at the lowest level for which the entity can identify cash flows that are largely independent of the cash flows of other assets and liabilities. Such a grouping is called an asset group.

An asset group is not recoverable if its carrying amount is in excess of the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. When an asset group is not recoverable, the next step is to measure an impairment loss as the amount by which the carrying amount of the asset group exceeds its fair value.

Long-Lived Assets to Be Disposed of by Sale

An entity may decide to sell one or more of its long-lived assets. Long-lived assets are grouped with the other assets and liabilities the entity intends to sell. Such a grouping is called a disposal group. Once all of the held-for-sale classification criteria are met, an entity classifies the disposal group as held for sale, stops depreciating or amortizing the long-lived assets, and measures the disposal group at the lower of its carrying amount or fair value less cost to sell. The entity recognizes a loss, if any, to adjust the carrying amount of the disposal group to its fair value less cost to sell in the period in which the held-for-sale criteria are met and in each subsequent period until the disposal group is sold. Therefore, the carrying amount of the disposal group is adjusted for subsequent increases or decreases in its fair value less cost to sell, except that any subsequent increase cannot exceed the cumulative loss previously recognized. Any gain or loss from the sale of the disposal group not previously recognized is recognized on the date of sale.

Long-Lived Assets to Be Disposed of Other Than by Sale

An entity may also dispose of one or more long-lived assets before the end of their previously estimated useful life by, for example, abandoning them, exchanging them in a transaction accounted for at carrying amount, or distributing them to owners in a spin-off. Assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of.

Presentation and Disclosure Requirements for Long-Lived Assets That Are Classified as Held for Sale or Have Been Disposed Of

Once long-lived assets have been classified as held for sale or have been disposed of, an entity must determine how to present the disposition in its financial statements. The entity must first assess whether the disposition meets the criteria for discontinued-operations reporting. The purpose of reporting discontinued operations separately from continuing operations is to provide stakeholders with information about assessing the effects of a disposal on an entity’s ongoing operations. The operations of a disposal group may be presented as a discontinued operation only if (1) the assets (and liabilities) meet the held-for-sale classification criteria or have been disposed of and (2) the disposal represents a strategic shift that has or will have a major effect on an entity’s operations and financial results. Therefore, not all disposals qualify for discontinued-operations reporting.

The disclosure requirements differ depending on whether a disposal (1) meets the criteria for discontinued-operations reporting, (2) does not meet the criteria for discontinued-operations reporting but is (or includes) an individually significant component of the entity, or (3) does not meet the criteria for discontinued-operations reporting and is not (or does not include) an individually significant component of the entity. Entities will need to use judgment in interpreting the meaning of the term “individually significant,” since this term is not defined. The table below summarizes the disclosure requirements.

If the disposition:
Meets the criteria for discontinued-operations reporting	The results of operations are reclassified to discontinued operations in the statement of operations, retrospectively, for all periods presented. In addition, the assets and liabilities of the disposal group are presented separately on the face of the balance sheet both in the current period (if held for sale) and in all prior periods.
Does not meet the criteria for discontinued-operations reporting but is an individually significant component	No reclassification of results of operations in the statement of operations. The assets and liabilities of the disposal group are separately presented on the face of the balance sheet only in the initial period in which the group is classified as held for sale. The entity should not reclassify prior-period balance sheets. As a result, if a disposal group is sold in the same period in which it is classified as held for sale, the assets and liabilities would not be separately presented in the balance sheet. Entities must disclose information required by ASC 360-10-50-3A about pretax profit or loss if the disposal group includes an individually significant component and does not qualify for discontinued-operations reporting. If an individually significant component includes a noncontrolling interest, the pretax profit or loss attributable to the parent must also be disclosed.
Does not meet the criteria for discontinued-operations reporting and is not an individually significant component	Same presentation and disclosure requirements as for individually significant components except that the entity is not required to disclose information about pretax profit or loss in accordance with ASC 360-10-50-3A.

Considerations for SEC Registrants

For disposals reported as discontinued operations, 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) and in 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, 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).

This Roadmap provides Deloitte’s insights into the guidance in ASC 360-10 and ASC 205-20 on impairments and disposals of long-lived assets and presentation of discontinued operations.

Contacts

Chapter 1 — Overview and Scope

1.3 Scope of ASC 360-10 — Impairment or Disposal of Long-Lived Assets

ASC 360-10

05-4 The Impairment or Disposal of Long-Lived Assets Subsections provide guidance for:

Recognition and measurement of the impairment of long-lived assets to be held and used
Measurement of long-lived assets to be disposed of by sale
Disclosures about the impairment or disposal of long-lived assets and disposals of individually significant components of an entity.

05-5 For long-lived assets disposed of or classified as held for sale, different presentation and disclosures are required depending on the nature of the disposal. If the long-lived assets are a significant component of an entity, more extensive disclosures are required. Additionally, if the component of an entity meets the definition of discontinued operation in paragraph 205-20-45-1B, an entity shall refer to Subtopic 205-20 for the presentation and disclosure requirements for discontinued operations (see the flowchart in paragraph 360-10-55-18A for an illustration).

15-4 The guidance in the Impairment or Disposal of Long-Lived Assets Subsections applies to the following transactions and activities:

Except as indicated in (b) and the following paragraph, all of the transactions and activities related to recognized long-lived assets of an entity to be held and used or to be disposed of, including:
1. Right-of-use assets of lessees
2. Long-lived assets of lessors subject to operating leases
3. Proved oil and gas properties that are being accounted for using the successful-efforts method of accounting
4. Long-term prepaid assets.
The following transactions and activities related to assets and liabilities that are considered part of an asset group or a disposal group:
1. If a long-lived asset (or assets) is part of a group that includes other assets and liabilities not covered by the Impairment or Disposal of Long-Lived Assets Subsections, the guidance in the Impairment or Disposal of Long-Lived Assets Subsections applies to the group. In those situations, the unit of accounting for the long-lived asset is its group. For a long-lived asset or assets to be held and used, that group is referred to as an asset group. For a long-lived asset or assets to be disposed of by sale or otherwise, that group is referred to as a disposal group. Examples of liabilities included in a disposal group are legal obligations that transfer with a long-lived asset, such as certain environmental obligations, and obligations that, for business reasons, a potential buyer would prefer to settle when assumed as part of a group, such as warranty obligations that relate to an acquired customer base.
2. The guidance in the Impairment or Disposal of Long-Lived Assets Subsections does not change generally accepted accounting principles (GAAP) applicable to those other individual assets (such as accounts receivable and inventory) and liabilities (such as accounts payable, long-term debt, and asset retirement obligations) not covered by the Impairment or Disposal of Long-Lived Assets Subsections that are included in such groups.

15-5 The guidance in the Impairment or Disposal of Long-Lived Assets Subsections does not apply to the following transactions and activities:

Goodwill
Intangible assets not being amortized that are to be held and used
Servicing assets
Financial instruments, including investments in equity securities accounted for under the cost or equity method
Deferred policy acquisition costs
Deferred tax assets
Unproved oil and gas properties that are being accounted for using the successful-efforts method of accounting
Oil and gas properties that are accounted for using the full-cost method of accounting as prescribed by the Securities and Exchange Commission (SEC) (see Regulation S-X, Rule 4-10, Financial Accounting and Reporting for Oil and Gas Producing Activities Pursuant to the Federal Securities Laws and the Energy Policy and Conservation Act of 1975)
Certain other long-lived assets for which the accounting is prescribed elsewhere in the standards:
1. For guidance on financial reporting in the record and music industry, see Topic 928.
2. For guidance on financial reporting in the broadcasting industry, see Topic 920.
3. For guidance on accounting for the costs of computer software to be sold, leased, or otherwise marketed, see Subtopic 985-20.
4. For guidance on accounting for abandonments and disallowances of plant costs for regulated entities, see Subtopic 980-360.

15-6 Entities that hold collections shall follow the accounting and disclosure requirements in Subtopic 958-360 on not-for-profit entities — property, plant, and equipment.

ASC 360-10 addresses the impairment or disposal of long-lived assets and applies to all entities. ASC 360-10 applies to individual long-lived assets as well as groups of assets (and possibly liabilities) that include one or more long-lived assets. Once an entity adopts ASC 842, the impairment guidance in ASC 360-10 also applies to a lessee’s right-of-use (ROU) assets for both operating and finance leases (see Section 2.3.4).

ASC 360-10-15-5 lists a number of assets (e.g., servicing assets, deferred policy acquisition costs, costs of computer software to be sold) that are outside the scope of the guidance in the subsections on impairment or disposal of long-lived assets. The impairment of those assets is addressed by other GAAP. These scope exclusions apply only to the assets for which the accounting is prescribed by other GAAP, not to the entire entity with those assets. As a result, an entity may account for some assets in accordance with other GAAP and others in accordance with ASC 360-10. In addition, entities within the scope of ASC 970 should consider the guidance in ASC 970-360 and ASC 970-340.

ASC 360-10-05-5 clarifies that ASC 360-10 applies to the accounting for disposals of long-lived assets. If the disposal meets the definition of a discontinued operation, an entity must apply the presentation and disclosure requirements in ASC 205-20; if the disposal does not meet the definition of a discontinued operation, an entity must apply the presentation and disclosure requirements in ASC 360-10. The disclosure requirements an entity needs to apply under ASC 360-10 differ depending on the significance of the disposal.

Chapter 2 — Definitions of Discontinued Operation and Component of an Entity

2.1 Overview

ASC 360-10

35-15 There are unique requirements of accounting for the impairment or disposal of long-lived assets to be held and used or to be disposed of. Although this guidance deals with matters which may lead to the ultimate disposition of assets, it is included in this Subsection because it describes the measurement and classification of assets to be held and used and assets held for disposal before actual disposition and derecognition. See the Impairment or Disposal of Long-Lived Assets Subsection of Section 360-10-40 for a discussion of assets or asset groups for which disposition has taken place in an exchange or distribution to owners.

Long-lived assets within the scope of ASC 360-10 are accounted for and tested for impairment differently depending on the entity’s intent with regard to the assets. Long-lived assets classified as held and used are those that the entity intends to recover through use. Long-lived assets the entity intends to recover through sale are classified as held and used until the held-for-sale classification criteria are met (Chapter 3). Long-lived assets the entity intends to dispose of other than by sale are classified as held and used until they are disposed of (Chapter 4).

ASC 360-10 contains a specific framework for accounting for long-lived assets classified as held and used. Under ASC 360-10-35-21, long-lived assets that are classified as held and used “shall be tested for recoverability whenever events or changes in circumstances indicate that [their] carrying amount may not be recoverable.” In addition, ASC 360-10-35-23 states that such assets “shall be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.”

In accordance with ASC 360-10-35-17, a long-lived asset (asset group) is not recoverable if its carrying amount “exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group).” When a long-lived asset (asset group) is not recoverable, it is necessary to determine its fair value since “[a]n impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value.”

2.8 Assets That Provide No Future Benefit

An entity may determine that a specific asset within a larger asset group has no future benefit (e.g., when the asset is destroyed [as opposed to damaged], becomes obsolete, or is lost). Even if the asset group is determined to be recoverable as a whole, the entity would need to write off an asset that has no future benefit.

Example 2-4

Entity A provides ground delivery services to its customers through a fleet of trucks. Entity A has appropriately determined that its ground delivery business represents a “lowest level” for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. One truck in its delivery fleet has been destroyed in an accident. Entity A can continue to provide ground delivery services at the same level by using the remaining trucks in its fleet in such a way that the destroyed truck is not expected to be replaced. Although A expects no adverse change in expected cash flows as a result of the loss of the truck, A must write off the asset that was destroyed.

An entity often maintains insurance to mitigate losses in the event of property damage or casualty losses. Even if an asset is insured, the entity would recognize a loss to write off the damaged asset and separately recognize any recovery. The recognized loss to write off an asset and any associated recovery proceeds (through insurance proceeds or other sources of recovery) is treated as two separate events and therefore two separate units of account. The principle underlying this separation is derived from the involuntary conversion guidance codified in ASC 610-30-25-2.

2.9 Presentation of an Impairment Loss

ASC 360-10

Presentation of Impairment Loss for Long-Lived Assets to Be Held and Used

45-4 An impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amount of that loss.

ASC 360-10-45-4 provides guidance on presentation of an impairment loss. An entity must present an impairment loss recognized for a long-lived asset (asset group) in income from continuing operations. If, instead of income before income taxes, the entity presents a similar subtotal, such as income from operations or operating income, it should include the impairment loss. The entity may present an impairment loss as a separate line item in income from continuing operations to meet the disclosure requirement in ASC 360-10-50-2.

Connecting the Dots

As described in ASC 360-10-35-4, depreciation is a “system of accounting which aims to distribute the cost or other basic value of tangible capital assets, less salvage (if any), over the estimated useful life of the [asset] in a systematic and rational manner. It is a process of allocation, not of valuation.” As a result, impairment losses should not be recognized in depreciation or amortization expense.

ASC 360-10-40-3A through 3C describe the guidance an entity should apply to derecognize an asset (asset group) that represents a (1) nonfinancial asset or (2) business:

40-3A An entity shall account for the derecognition of a nonfinancial asset, including an in substance nonfinancial asset and an asset subject to a lease, within the scope of this Topic in accordance with Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, unless a scope exception from Subtopic 610-20 applies. For example, the derecognition of a nonfinancial asset in a contract with a customer shall be accounted for in accordance with Topic 606 on revenue from contracts with customers.

40-3B An entity shall account for the derecognition of a subsidiary or group of assets that is either a business or nonprofit activity in accordance with the derecognition guidance in Subtopic 810-10.

40-3C If an entity transfers a nonfinancial asset in accordance with paragraph 360-10-40-3A, and the contract does not meet all of the criteria in paragraph 606-10-25-1, the entity shall not derecognize the nonfinancial asset and shall follow the guidance in paragraphs 606-10-25-6 through 25-8 to determine if and when the contract subsequently meets all the criteria in paragraph 606-10-25-1. Until all the criteria in paragraph 606-10-25-1 are met, the entity shall continue to do all of the following:

Report the nonfinancial asset in its financial statements
Recognize depreciation expense as a period cost unless the assets have been classified as held for sale in accordance with paragraphs 360-10-45-9 through 45-10
Apply the impairment guidance in Section 360-10-35.

For additional guidance on accounting for a sale of nonfinancial assets, see Deloitte’s Roadmap Revenue Recognition.

Chapter 3 — Held-for-Sale Classification Criteria and Related Measurement

3.2 Grouping Assets to Be Sold

Assets may be sold individually or as part of a group of assets (and possibly liabilities). The ASC master glossary defines a disposal group as follows:

A disposal group for a long-lived asset or assets to be disposed of by sale or otherwise represents assets to be disposed of together as a group in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction. A disposal group may include a discontinued operation along with other assets and liabilities that are not part of the discontinued operation.

A disposal group may include not only long-lived assets that are within the scope of ASC 360-10 but also other assets such as receivables, inventory, indefinite-lived intangible assets, or goodwill. A disposal group may also “include a discontinued operation along with other assets and liabilities that are not part of the discontinued operation.” In addition, a disposal group may include liabilities directly associated with the assets that will be transferred to the buyer. Examples of such liabilities include environmental obligations, asset retirement obligations, and mortgage obligations.

Further, certain operations to be sold may qualify for discontinued-operations reporting even if the assets associated with those operations do not contain long-lived assets that are within the scope of ASC 360-10 (e.g., an equity method investment). For that reason, the same held-for-sale criteria in ASC 360-10-45-9 were incorporated into ASC 205-20-45-1E to allow entities to classify a component of an entity as held for sale even though the component may not include long-lived assets that are within the scope of ASC 360-10.

Connecting the Dots

For simplicity, the term “disposal group” is used throughout this publication to refer to an asset, a group of assets (and possibly liabilities), or a component of an entity that is classified as held for sale by the entity.

3.4 Including Specific Items in a Disposal Group

The sections below provide guidance on determining whether certain items should be included in a disposal group.

3.4.1 Goodwill

ASC 350-20

40-1 When a reporting unit is to be disposed of in its entirety, goodwill of that reporting unit shall be included in the carrying amount of the reporting unit in determining the gain or loss on disposal.

40-2 When a portion of a reporting unit that constitutes a business (see Section 805-10-55) or nonprofit activity is to be disposed of, goodwill associated with that business or nonprofit activity shall be included in the carrying amount of the business or nonprofit activity in determining the gain or loss on disposal.

40-3 The amount of goodwill to be included in that carrying amount shall be based on the relative fair values of the business or nonprofit activity to be disposed of and the portion of the reporting unit that will be retained. For example, if a reporting unit with a fair value of $400 is selling a business or nonprofit activity for $100 and the fair value of the reporting unit excluding the business or nonprofit activity being sold is $300, 25 percent of the goodwill residing in the reporting unit would be included in the carrying amount of the business or nonprofit activity to be sold.

40-4 However, if the business or nonprofit activity to be disposed of was never integrated into the reporting unit after its acquisition and thus the benefits of the acquired goodwill were never realized by the rest of the reporting unit, the current carrying amount of that acquired goodwill shall be included in the carrying amount of the business or nonprofit activity to be disposed of.

40-5 That situation might occur when the acquired business or nonprofit activity is operated as a standalone entity or when the business or nonprofit activity is to be disposed of shortly after it is acquired.

40-6 Situations in which the acquired business or nonprofit activity is operated as a standalone entity are expected to be infrequent because some amount of integration generally occurs after an acquisition.

40-7 When only a portion of goodwill is allocated to a business or nonprofit activity to be disposed of, the goodwill remaining in the portion of the reporting unit to be retained shall be tested for impairment in accordance with paragraphs 350-20-35-3A through 35-13 using its adjusted carrying amount.

Entities may need to include goodwill in a disposal group even if goodwill was not assigned to the asset group while the assets were classified as held and used in accordance with ASC 360-10-35-26 (see Section 2.3.2).

The following table describes how goodwill should be allocated to disposal groups in various circumstances:

Assigning Goodwill to Disposal Groups
Disposal group is a reporting unit or a group of reporting units.	The goodwill assigned to the reporting unit(s) is included in the carrying amount of the disposal group in accordance with ASC 350-20-40-1.
Disposal group represents a portion of one or more reporting units and constitutes a business under ASC 805-10.	Goodwill should be allocated to the disposal group in accordance with ASC 350-20-40-2 through 40-6, generally on a relative fair value basis (unless the business was never integrated into the reporting unit). In addition, under ASC 350-20-40-7, the goodwill remaining in the portion of the reporting unit to be retained by the entity must be tested for impairment.
Disposal group represents a portion of one or more reporting units but does not constitute a business under ASC 805-10.	Goodwill should not be allocated to the disposal group because goodwill is only derecognized when a business is disposed of or when goodwill is impaired. However, the entity should consider whether the disposal would result in a triggering event and thus whether the entity would be required to perform impairment testing of the goodwill of the reporting unit(s) from which the assets were disposed of.

When a disposal group is classified as held for sale and meets the criteria for reporting in discontinued operations, an entity must reclassify the assets and liabilities of the disposal group in the prior-period balance sheets (see Section 7.2). We believe that goodwill related to a disposal group that is a reporting unit or that meets the definition of a business should also be included with the assets and liabilities of the discontinued operation in those prior periods.

When determining whether goodwill should be allocated to a disposal of a portion of a reporting unit, entities should apply the definition of a business, as clarified in ASU 2017-01, regardless of whether the assets disposed of were acquired and determined to be a business under previous guidance. For more information about determining whether a disposal group meets the definition of a business in ASC 805-10, see Section 2.4 of Deloitte’s Roadmap Business Combinations.

In addition, see Section 7.4.1 for guidance on including goodwill impairment charges in discontinued operations.

Example 3-3

Assigning Goodwill to a Disposal Group

Company A acquires Company B in a business combination. Company A retains B as a separate subsidiary, and B elects to apply pushdown accounting in its separate financial statements. Company A recognizes goodwill of $200 from the acquisition of B in its consolidated financial statements. In applying pushdown accounting, B recognizes $200 of goodwill in its separate financial statements. Company A determines that B represents a separate reporting unit in accordance with ASC 350-20.

On the basis of the expected synergies from the acquisition of B, A assigns $150 of the $200 of recognized goodwill to B and $50 to Subsidiary X, a different reporting unit of A. For purposes of A’s consolidated financial statements, when A tests its B reporting unit for impairment, it will test goodwill of $150, which was the amount assigned to the B reporting unit. ASC 350-20 also requires that subsidiaries that issue separate financial statements test goodwill at the subsidiary level by using the subsidiary’s reporting units. Subsidiary B will test the goodwill of $200 recognized in its separate financial statements. Any impairment loss recognized in B’s separate financial statements would not necessarily result in an impairment loss in A’s consolidated financial statements, but it may represent a triggering event for A.

If A were to dispose of B in its entirety, A would only include the $150 of assigned goodwill in determining the gain or loss on the disposal of B. To appropriately account for the gain or loss on disposal in its consolidated financial statements, A would therefore need to make an adjustment at the consolidated level to exclude $50 of goodwill assigned to X from the disposed assets. Just as if A were to dispose of X in its entirety, A would include the assigned goodwill amount of $50 in calculating the gain or loss on the disposal. To appropriately account for the gain or loss on disposal, A would therefore need to make an adjustment at the consolidated level to include the $50 of goodwill assigned to X with X’s disposed assets.

3.4.2 Cumulative Translation Adjustment and Other Items of Accumulated Other Comprehensive Income

ASC 830-30-45-13 states, in part, that “an entity that has committed to a plan that will cause the cumulative translation adjustment [CTA] for an equity method investment or a consolidated investment in a foreign entity to be reclassified to earnings shall include the [CTA] as part of the carrying amount of the investment when evaluating that investment for impairment.” Therefore, the carrying value of a disposal group should include the CTA that will be eliminated upon sale once the disposal group is classified as held for sale. If unrealized gains in AOCI are not included in the carrying amount of the disposal group, a loss may be recognized in the period in which the disposal group is classified as held for sale, and a subsequent gain may be recognized when the disposition occurs. Alternatively, if unrealized losses in AOCI are not included in the carrying amount of the disposal group, a loss that might otherwise be measured might be deferred until the disposition occurs.

The CTA should remain classified in equity until the disposal group is sold (or disposed of other than by sale) on the basis of the guidance in ASC 830-30-40-1, which states:

Upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity, the amount attributable to that entity and accumulated in the translation adjustment component of equity shall be both:

Removed from the separate component of equity
Reported as part of the gain or loss on sale or liquidation of the investment for the period during which the sale or liquidation occurs.

For an illustration of how OCI would be treated in the testing of the disposal of a foreign entity for impairment, see Example 5-24 in Deloitte’s Roadmap Foreign Currency Matters.

Furthermore, the FASB’s implementation group regarding foreign currency matters indicated in its meeting minutes that:

Paragraph 14 [of FASB Statement 52 (codified in ASC 830-30-40-1)] states that the translation component is removed from equity and reported as part of the gain or loss on sale or complete or substantially complete liquidation. We believe the timing of loss and gain recognition remains consistent with the provisions of [FASB Statement 5 (codified in ASC 450)] and APB Opinion 30 (codified in ASC 225-20)].

Therefore, the CTA should be reclassified out of equity in the period in which the disposal occurs but the CTA balance related to prior periods should not be reclassified.

While ASC 830-30-40-1 and ASC 830-30-45-13 address foreign currency translation adjustments, there is no specific U.S. GAAP guidance on the treatment of other items included in AOCI (e.g., unrealized holding gains and losses on available-for-sale debt securities, gains and losses related to postretirement benefits) in the assessment of a disposal group for impairment. However, we believe that it is appropriate to analogize to that guidance for all items of AOCI. See Section 2.3.6 for more information about situations in which an asset group does not yet meet the criteria to be classified as held for sale. For more information about testing a foreign entity for impairment and the reclassification of the CTA out of equity, see Deloitte’s Roadmap Foreign Currency Matters.

3.6 Subsequent Measurement While a Disposal Group Is Classified as Held for Sale

ASC 360-10

35-40 A loss shall be recognized for any initial or subsequent write-down to fair value less cost to sell. A gain shall be recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized (for a write-down to fair value less cost to sell). The loss or gain shall adjust only the carrying amount of a long-lived asset, whether classified as held for sale individually or as part of a disposal group.

The fair value less costs to sell of a disposal group must be reassessed in each reporting period in which it is classified as held for sale. In accordance with ASC 360-10-35-40, “[a] loss shall be recognized for any initial or subsequent write-down to fair value less cost to sell” while “[a] gain shall be recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized (for a write-down to fair value less cost to sell).”

Example 3-5

On January 31, 20X8, Company T announces a plan to move to a new corporate headquarters. According to the plan, T expects to vacate and sell the company-owned office building that currently houses its corporate headquarters. On April 30, 20X8, T completes the move and has met the criteria to classify the property as held for sale. As of that date, the carrying value of the property is $21 million and T estimates that the fair value less cost to sell is $16 million (including $1 million in estimated sale costs). Accordingly, T recognizes a loss of $5 million.

As of December 31, 20X8, T had not yet sold the property; however, because of improved conditions in the real estate market, T estimates that the fair value less costs to sell of the property is $18 million. Therefore, in its December 31, 20X8, financial statements, T recognizes a gain of $2 million because the increase is less than the cumulative loss previously recognized.

3.6.1 Depreciation and Amortization

Long-lived assets to be sold will be recovered through sale and not through future operations. Therefore, long-lived assets are not depreciated or amortized once they are classified as held for sale in accordance with ASC 360-10-35-43. Although an entity may still be using the assets and obtaining benefits from their use, the FASB concluded, as noted in FASB Statement 144, that continuing to depreciate or amortize them is “inconsistent with the use of a lower of carrying amount or fair value measure for a long-lived asset classified as held for sale.”

In addition, because ROU assets are within the scope of ASC 360-10, we believe that the guidance in ASC 360-10-35-43 applies to ROU assets included in a disposal group. Therefore, entities should cease amortization of any ROU assets once the disposal group meets the held-for-sale criteria, just as they would for any other asset within the scope of ASC 360-10, even though the interest on any related lease liabilities should continue to be accreted in accordance with ASC 842.

3.10 Consideration of Subsequent Events for Assessing Held-for-Sale Classification

ASC 360-10

45-13 If the criteria in paragraph 360-10-45-9 are met after the balance sheet date but before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25), a long-lived asset shall continue to be classified as held and used in those financial statements when issued or when available to be issued. In addition, information required by paragraph 205-20-50-1(a) shall be disclosed in the notes to financial statements. If the asset (asset group) is tested for recoverability (on a held-and-used basis) as of the balance sheet date, the estimates of future cash flows used in that test shall consider the likelihood of possible outcomes that existed at the balance sheet date, including the assessment of the likelihood of the future sale of the asset. That assessment made as of the balance sheet date shall not be revised for a decision to sell the asset after the balance sheet date. Because it is difficult to separate the benefit of hindsight when assessing conditions that existed at a prior date, it is important that judgments about those conditions, the need to test an asset for recoverability, and the application of a recoverability test be made and documented together with supporting evidence on a timely basis. An impairment loss, if any, to be recognized shall be measured as the amount by which the carrying amount of the asset (asset group) exceeds its fair value at the balance sheet date.

ASC 360-10-45-13 states that if the held-for-sale criteria “are met after the balance sheet date but before the financial statements are issued or are available to be issued” (as discussed in ASC 855-10-25), the long-lived asset (or disposal group) is “classified as held and used in those financial statements when issued or when available to be issued.” This paragraph further indicates that an entity should disclose the information required by ASC 205-20-50-1(a) in the notes to financial statements. If a component either meets the held-for-sale criteria or is disposed of “after the balance sheet date but before the financial statements are issued or are available to be issued,” entities should also consider the disclosure requirements in ASC 855-10-50 related to nonrecognized subsequent events.

While ASC 205-20 does not include similar guidance, we believe that entities should apply it to disposal groups that qualify for discontinued-operations reporting. Similarly, we think that if the held-for-sale criteria are met before the balance sheet date but are no longer met when the financial statements are issued or are available to be issued, the disposal group should be classified as held for sale in the financial statements. We also believe that an entity should consider providing the disclosures in ASC 205-20-50-3 (see Section 7.7.1) about its change in plan. See Section 3.9 for guidance on the accounting in situations in which an entity has a change in its plan of sale.

Further, ASC 360-10-45-13 goes on to say that “[i]f the asset (asset group) is tested for recoverability (on a held-and-used basis) as of the balance sheet date, the estimates of future cash flows used in that test shall consider the likelihood of possible outcomes that existed at the balance sheet date, including the assessment of the likelihood of the future sale of the asset. That assessment made as of the balance sheet date shall not be revised for a decision to sell the asset after the balance sheet date” (see Section 2.4.2).

Chapter 4 — Criteria for Reporting a Discontinued Operation

4.1 Overview

ASC 360-10

45-15 A long-lived asset to be disposed of other than by sale (for example, by abandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff) shall continue to be classified as held and used until it is disposed of. The guidance on long-lived assets to be held and used in Sections 360-10-35, 360-10-45, and 360-10-50 shall apply while the asset is classified as held and used. If a long-lived asset is to be abandoned or distributed to owners in a spinoff together with other assets (and liabilities) as a group and that disposal group meets the conditions in paragraphs 205-20-45-1A through 45-1C to be reported in discontinued operations, paragraphs 205-20-45-3 through 45-5 shall apply to the disposal group at the date it is disposed of.

A long-lived asset (or a group of assets) may be disposed of in ways other than by sale, such as by abandonment, in an exchange measured on the basis of the recorded amount of the nonmonetary asset relinquished (i.e., a nonmonetary exchange), or in a distribution to owners in a spin-off. Assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of. Upon disposal, entities must assess whether the disposed-of assets qualify for discontinued-operations reporting. If not, the entity should apply the presentation and disclosure requirements in ASC 360-10 (see Chapter 6). If so, the entity should apply the presentation and disclosure requirements in ASC 205-20 (see Chapter 7).

Because assets to be disposed of other than by sale are classified as held and used until they are disposed of, the operations and any incremental direct costs (e.g., advisory fees or legal fees) that are incurred in connection with the disposal cannot be reported in discontinued operations until the disposal group is abandoned or otherwise disposed of even if the disposal would otherwise qualify for discontinued-operations reporting.

4.3 Nonmonetary Exchange

A nonmonetary exchange is a reciprocal transaction that involves an exchange of assets (or liabilities) or services with another entity. ASC 360-10-45-15 requires that a long-lived asset or asset group to be disposed of in an exchange, measured on the basis of the recorded amount of the nonmonetary asset relinquished, continue to be classified as held and used until it is disposed of. A nonmonetary exchange that meets any of the below criteria in ASC 845-10-30-3 must be recognized on the basis of the recorded amount of the nonmonetary asset given up.

ASC 845-10

30-3 A nonmonetary exchange shall be measured based on the recorded amount (after reduction, if appropriate, for an indicated impairment of value as discussed in paragraph 360-10-40-4) of the nonmonetary asset(s) relinquished, and not on the fair values of the exchanged assets, if any of the following conditions apply:

The fair value of neither the asset(s) received nor the asset(s) relinquished is determinable within reasonable limits.
The transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange.
The transaction lacks commercial substance (see [ASC 845-10-30-4]).

By contrast, if the nonmonetary exchange does not meet any of the conditions in ASC 845-10-30-3, the exchange is accounted for at fair value. In that case, we believe that the disposal should be assessed as a sale transaction and the disposal group should be classified as held for sale when the criteria are met (see Section 3.3).

A decision to engage in a nonmonetary exchange does not, in and of itself, indicate that the asset being exchanged is not recoverable. However, an entity should consider its specific facts and circumstances in determining whether the exchange represents an indicator of impairment. If so, the asset or assets should be tested for impairment on a held-and-used basis if they are classified as held and used or on a held-for-sale basis if the exchange is at fair value and the held-for-sale classification criteria are met.

4.5 Other Nonreciprocal Transfers Other Than Spin-Offs

While other nonreciprocal transfers of long-lived assets (e.g., split-offs, dividends-in-kind, common-control transfers, or donations) are not specifically addressed in U.S. GAAP, we believe that such transfers are also disposals other than by sale, regardless of whether they are measured at historical cost or fair value in the transferring entity’s books. Thus, we believe that, by analogy to the guidance in ASC 845-10-30-10, the assets being distributed in a nonreciprocal exchange should remain classified as held and used until the distribution occurs.

4.5.1 Common-Control Transactions

As discussed in Appendix B.4.3 of Deloitte’s Roadmap Business Combinations, the transferring entity typically accounts for the transfer of assets in a common-control transaction as a disposition in accordance with ASC 360-10. We believe that, while not specifically addressed in the guidance, the net assets to be disposed of in a common-control transaction should be classified as held and used until they are exchanged or distributed in the same manner as net assets to be distributed in a spin-off. Therefore, the net assets to be transferred in a common-control transaction should be considered disposed of “other than by sale” and should not be classified as held for sale in the periods before they are exchanged or distributed, even if the transferring entity will receive consideration as part of the exchange.

ASC 360-10-40-4 requires that a spinnor recognize an impairment loss on the date on which long-lived assets are distributed in a spin-off if the carrying amount of the assets (disposal group) exceeds their fair value. While a common-control transaction is accounted for as a disposal other than by sale in the same manner as a spin-off transaction, we do not believe that the transferring entity is required to recognize an impairment loss if the carrying amount of the assets to be distributed in a common-control transaction exceeds their fair value. Rather, we believe that the FASB intended for the guidance in ASC 360-10-40-4 to address the impairment guidance in ASC 845-10-30-10 explicitly referring to a distribution to owners in a spin-off transaction and that this guidance should not be extended to transfers of assets under common control of the same parent.

However, ASC 360-10-35-21 requires that an entity test a long-lived asset (asset group) classified as held and used for impairment whenever “events or changes in circumstances indicate that its carrying amount may not be recoverable.” Therefore, the transferring entity should consider whether the common-control transaction indicates that the long-lived assets (asset group) to be transferred should be tested for impairment under the held-and-used model before the disposal date. ASC 360-10-40-4 clarifies that even if the entity intends to distribute assets in a spin-off transaction, the assets should be tested for recoverability, if necessary, as if they are held and used, and the estimates of future cash flows used in the recoverability test should be based on the use of the assets for their remaining useful life, provided that the disposal transaction will not occur. We believe that the same approach should be applied to assets to be distributed in a common-control transaction if the transferring entity determines that a triggering event has occurred and that the assets should be tested for recoverability before they are transferred.

Chapter 5 — Discontinued Operations

5.5 Continuing Involvement

While ASC 205-20 does not preclude discontinued-operations reporting if the entity has continuing involvement with the disposed-of component, we believe that entities should consider the nature, time frame, and extent of any continuing involvement in determining whether there has been a strategic shift that has (or will have) a major effect on their operations and financial results. Continuing involvement may be indicated by, for example, (1) supply chain and distribution agreements, (2) financial guarantees, (3) options to repurchase assets that were disposed of, and (4) retained equity method investments (but generally not retained cost method investments).

ASC 205-20-50-4A and 50-4B require entities to disclose the nature of any significant continuing involvement with a discontinued operation after the disposal date. See Section 7.7.3 for more information about those disclosure requirements.

ASC 205-20-55-97 through 55-101 contain the following example of a disposal transaction in which the entity retains a significant investment in the discontinued operation:

ASC 205-20

Example 5: Sports Equipment Manufacturer

55-97 This Example provides an illustration of the guidance in paragraphs 205-20-45-1B through 45-1C. In this Example, the entity sells 80 percent of a group of components of an entity representing a strategic shift that has a major effect on the entity’s operations and financial results and is reported in discontinued operations.

55-98 An entity that manufactures and sells sports equipment has two product lines that serve the football and baseball markets. Each product line includes several different brands that each comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. Therefore, for that entity, each product line includes a group of components of the entity.

55-99 The entity decides to shift its strategy of trying to sell products to the baseball equipment market, which accounts for 40 percent of its revenues, and focus more on serving its customers in the football equipment market. However, the entity decides to retain some exposure to the baseball equipment market by selling only 80 percent of the group of components in its product line that serves the baseball market to another entity.

55-100 Because the entity decides to shift its strategy of trying to sell products to the baseball equipment market by selling 80 percent of the group of components of the entity in that product line and because the portion sold comprises a major part of the entity’s operations and financial results, its disposal represents a strategic shift that is reported in discontinued operations.

55-101 Because of the entity’s significant continuing involvement after the disposal date, the entity provides the disclosures required by paragraphs 205-20-50-4A through 50-4B.

Chapter 6 — Presentation and Disclosure Requirements for Disposals That Are Not Reported as Discontinued Operations

6.2 Balance Sheet Presentation for Assets (Disposal Groups) Classified as Held for Sale That Are Not Discontinued Operations

ASC 360-10

Presentation of Long-Lived Assets or Disposal Group Classified as Held for Sale

45-14 A long-lived asset classified as held for sale (but not qualifying for presentation as a discontinued operation in the statement of financial position in accordance with paragraph 205-20-45-10) shall be presented separately in the statement of financial position of the current period. The assets and liabilities of a disposal group classified as held for sale shall be presented separately in the asset and liability sections, respectively, of the statement of financial position. Those assets and liabilities shall not be offset and presented as a single amount. The major classes of assets and liabilities classified as held for sale shall be separately presented on the face of the statement of financial position or disclosed in the notes to financial statements (see paragraph 360-10-50-3(e)).

For disposal groups that are classified as held for sale but that do not meet the criteria for discontinued-operations reporting, ASC 360-10-45-14 requires that the assets and liabilities of the disposal group be separately presented on the face of the balance sheet only in the initial period in which it is classified as held for sale. As a result, if a disposal group is sold in the same period in which it is classified as held for sale, the assets and liabilities would not be separately presented in the balance sheet. We believe that, while not specifically addressed in ASC 360, in such circumstances, an entity should not reclassify prior-period balance sheets. Such disposal groups are distinguishable from those that do qualify for discontinued-operations reporting, since an entity would be required to reclassify the prior period for the latter. However, in the absence of specific guidance, we understand that diversity in practice may exist.

In the period in which long-lived assets or disposal groups that do not qualify as discontinued operations are classified as held for sale, their major classes of assets and liabilities must be either (1) presented on the face of the balance sheet in accordance with ASC 360-10-45-14 or (2) disclosed in the notes in accordance with ASC 360-10-50-3(e).

ASC 360-10 does not address whether entities should separately present the assets and liabilities of a disposal group classified as held for sale as current and noncurrent. Accordingly, we believe that it is acceptable to present these assets and liabilities as current in the current-period balance sheet if it is probable that the sale will occur and consideration will be collected within one year.

6.3 Income Statement Presentation for Disposals That Are Not Discontinued Operations

ASC 360-10

45-5 A gain or loss recognized (see Subtopic 610-20 on the sale or transfer of a nonfinancial asset) on the sale of a long-lived asset (disposal group) that is not a discontinued operation shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.

As noted above, ASC 360-10-45-5 requires that entities present gains or losses recognized from a sale of a long-lived asset (disposal group) that does not qualify as a discontinued operation “in income from continuing operations before income taxes in the income statement.” If, instead of income before income taxes, an entity presents a similar subtotal, such as income from operations or operating income, it should include such gains or losses.

Diversity in practice has been observed with regard to the presentation of gains or losses from the sale of disposal groups that meet the definition of a business in ASC 805-10. That is, some entities have presented such gains or losses in nonoperating income rather than as a component of income from operations when they present a subtotal such as income from operations or operating income. Entities should consider their specific facts and circumstances in deciding whether presentation in nonoperating income is appropriate and should ensure that the presentation is applied consistently.

See Deloitte’s Roadmap Business Combinations for more information about determining whether a disposal group meets the definition of a business.

6.3.1 Income Statement Presentation for Real Estate Investment Trusts

As part of its disclosure update and simplification technical release (DUSTR), the SEC issued a final rule in August 2018 to amend certain of its disclosure requirements “that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, [U.S. GAAP], or changes in the information environment.” The final rule deleted SEC Regulation S-X, Rule 3-15(a)(1), which prescribed guidance on the presentation of gains and losses related to the sale of properties by REITs, since Rule 3-15(a)(1) conflicted with U.S. GAAP.

Before the issuance of DUSTR, Rule 3-15(a)(1) required REITs to “present separately all gains and losses on the sale of properties outside of continuing operations in the income statement.” In contrast, ASC 360-10-45-5 states that gains or losses recognized on sales of long-lived assets that are not reported in discontinued operations should be included in “income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.” As indicated in the highlights of the June 25, 2014, CAQ SEC Regulations Committee joint meeting with the SEC staff, the staff had stated that it would not object to presentations that complied with either Rule 3-15(a)(1) or ASC 360-10, provided that the presentation was transparent and adequately disclosed.

However, because of the elimination of Rule 3-15(a)(1), REITs now must comply with the requirements of ASC 360-10-45-5 after November 5, 2018 (i.e., the effective date of DUSTR). While entities are not required by U.S. GAAP or SEC regulations to present income from continuing operations before income taxes or a similar subtotal such as operating income, if a REIT does present such a subtotal, it should include gains or losses on the sale of properties that do not qualify as discontinued operations. See Deloitte’s August 28, 2018, Heads Up for more information.

Chapter 7 — Presentation and Disclosure Requirements for Disposals That Are Reported as Discontinued Operations

7.2 Balance Sheet Presentation of Discontinued Operations

ASC 205-20

45-10 In the period(s) that a discontinued operation is classified as held for sale and for all prior periods presented, the assets and liabilities of the discontinued operation shall be presented separately in the asset and liability sections, respectively, of the statement of financial position. Those assets and liabilities shall not be offset and presented as a single amount. If a discontinued operation is part of a disposal group that includes other assets and liabilities that are not part of the discontinued operation, an entity may present the assets and liabilities of the disposal group separately in the asset and liability sections, respectively, of the statement of financial position. If a discontinued operation is disposed of before meeting the criteria in paragraph 205-20-45-1E to be classified as held for sale, an entity shall present the assets and liabilities of the discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position for the periods presented in the statement of financial position before the period that includes the disposal. When an entity separately presents in prior periods the assets and liabilities of a discontinued operation, the entity shall not apply the guidance in paragraph 360-10-35-43 as if those assets and liabilities were held for sale in those prior periods.

Under ASC 205-20-45-10, in the period in which a component meets the held-for-sale and discontinued-operations criteria, an entity must present the assets and liabilities of the discontinued operation separately in the asset and liability sections of the balance sheet. Assets and liabilities cannot be offset and presented as a single amount. ASC 205-20-45-10 also requires that an entity reclassify not only the current-period balance sheet but also any comparative balance sheets presented. For example, a discontinued operation that is classified as held for sale and sold in the same reporting period would be presented as held for sale in prior-period balance sheets (but not in the current-period balance sheet). Similarly, the assets and liabilities of a discontinued operation that is abandoned in the current period would be reclassified in the prior-period balance sheet. “Held for sale” or “held for disposition” presentation in the prior periods is appropriate even if the discontinued operation did not meet the criteria to be classified as held for sale (or was not yet disposed of other than by sale) in those prior periods. Similar presentation in the prior periods would also be appropriate for the assets and liabilities to be transferred in a spin-off transaction, but such presentation would not be reflected until after the spin-off actually occurs (see Section 4.4).

ASC 205-20 does not address whether entities should separately present the assets and liabilities of a discontinued operation as current and noncurrent. We believe that it is appropriate to do so and that four balance sheet captions may result from such presentation (e.g., “current assets held for sale,” “noncurrent assets held for sale,” “current liabilities held for sale,” and “noncurrent liabilities held for sale”). In addition, we believe that it is acceptable for an entity to present the assets and liabilities of a discontinued operation classified as held for sale as current in the current-period balance sheet if it is probable that the sale will occur, proceeds will be collected within one year, and the proceeds are not expected to be used to settle long-term debt. See Section 13.3.3.5 of Deloitte’s Roadmap Issuer’s Accounting for Debt for more information about financial statement presentation related to disposals in which proceeds will be used to settle long-term debt. We think that the current and noncurrent classifications of a discontinued operation’s assets and liabilities should not change in prior periods because the noncurrent assets and liabilities did not meet the criteria for presentation as current in those prior periods.

In the period in which a component meets the criteria for presentation in discontinued operations, the entity must provide detailed information about the assets and liabilities of the discontinued operation. Therefore, the major classes of the discontinued operation’s assets and liabilities must be either (1) presented on the face of the balance sheet in accordance with ASC 205-20-45-11 or (2) disclosed in the notes in accordance with ASC 205-20-50-5B(e) (see Section 7.8.1).

Such presentation or disclosure must be provided for the discontinued operation in the current period and all prior periods presented. If the major classes of assets and liabilities of a discontinued operation are disclosed in the notes, the disclosure must be reconciled to the amounts presented on the balance sheet, and if the disposal group includes assets or liabilities that are not part of the discontinued operation, the reconciliation should show them separately from the assets and liabilities of the discontinued operation. Entities will need to apply judgment in determining what constitutes “major” with respect to such presentation or disclosure, since ASC 205-20 does not provide guidance on this topic.

SEC registrants should also evaluate the reporting considerations discussed in Chapter 8.

Example 7-1

Illustrative Balance Sheet Presentation of a Discontinued Operation

Below is an example of a simplified comparative balance sheet presentation for a component that meets the criteria to be presented as a discontinued operation in the current period.

See Example 7-7 for an illustration of the disclosure in the notes to financial statements (see ASC 205-20-50-5B(e)) of the discontinued operation’s major classes of assets and liabilities classified as held for sale for all periods presented in the statement of financial position.

Chapter 8 — Reporting Considerations for SEC Registrants

8.2 Financial Statements and Other Affected Financial Information in Exchange Act Reports

When a component meets the criteria in ASC 205-20 for presentation as a discontinued operation, the component’s results of operations must be retrospectively reclassified to discontinued operations in the current period and all prior periods presented when it first reports the discontinued operation. MD&A and other affected financial information for prior periods should also be updated to reflect the retrospective adjustment.

Registrants that present three years of financial statements may omit discussion of the earliest year of changes in financial condition and results of operations if such discussion was already included in any of the registrants’ prior EDGAR filings that required such information. Registrants electing to omit such discussion must disclose, in the current filing, the location of such discussion in the prior filing. Registrants should consider the total mix of available information, including the impact of any recastable events (e.g., a retrospective accounting change such as a discontinued operation) on the prior-period MD&A, when determining whether to omit discussion of the earliest year and the most appropriate form of presentation. If a registrant concludes that it is necessary to discuss operations related to the earliest period presented, it may limit the discussion to the information that has changed or has been determined to be significant to its operations or financial condition.

If a discontinued operation is first reported in interim financial statements in a Form 10-Q, a registrant is not immediately required to retrospectively adjust the annual financial statements presented in the most recent Form 10-K (annual pre-event financial statements) to reflect the discontinued operation. A registrant is generally not required to adjust the annual pre-event financial statements to reflect the discontinued operation until they are comparatively presented with the annual financial statements that report the discontinued operation (generally in the registrant’s next Form 10-K). However, see Section 8.3 for circumstances in which this requirement may be accelerated.

In addition, SEC Regulation S-K, Item 302(a), requires that if a registrant reports a material retrospective change (or changes), such as discontinued operations, for any of the quarters within the two most recent fiscal years, the registrant must disclose (1) an explanation for the material change(s) and (2) summarized financial information reflecting such change(s) for the affected quarterly periods, including the fourth quarter. Summarized financial information, which is required in a Form 10-K and certain registration statements, should include, at a minimum:

Net sales or gross revenues.
Gross profit (or costs and expenses related to net sales or gross revenues).
Income (loss) from continuing operations.
Net income (loss).
Net income (loss) attributable to the entity.
Earnings (loss) per share

Since this requirement only applies when there is a material retrospective change, a registrant may not have provided such information in its most recent Form 10-K. However, upon reporting a material discontinued operation, a registrant would be required to include such disclosure in its next Form 10-K or retrospectively revised financial statements filed in conjunction with certain registration statements, as discussed below.

Example 8-1

Form 10-Q That First Reports a Component as a Discontinued Operation

Company A, an SEC registrant, determines that it has met the requirements for presenting Component B as a discontinued operation on March 1, 20X6. When A files its Form 10-Q for the quarter ended March 31, 20X6, it must retrospectively reclassify B’s results as a discontinued operation for the comparative interim period ended March 31, 20X5. Company A must also update MD&A for the interim period ended March 31, 20X5, to reflect the retrospective adjustments. However, there is no immediate requirement for A to retrospectively reclassify B’s results as a discontinued operation for the annual financial statements presented in its Form 10-K for the year ended December 31, 20X5.

Further, Question 2 of SAB Topic 5.Z.5 provides interpretive guidance on disclosures that the staff would expect “regarding discontinued operations prior to the disposal date and with respect to risks retained subsequent to the disposal date.” Question 2 further states:

MD&A [footnote omitted] should include disclosure of known trends, events, and uncertainties involving discontinued operations that may materially affect the Company’s liquidity, financial condition, and results of operations (including net income) between the date when a component of an entity is classified as discontinued and the date when the risks of those operations will be transferred or otherwise terminated. Disclosure should include discussion of the impact on the Company’s liquidity, financial condition, and results of operations of changes in the plan of disposal or changes in circumstances related to the plan. Material contingent liabilities . . . [footnote omitted] that may remain with the Company notwithstanding disposal of the underlying business should be identified in notes to the financial statements and any reasonably likely range of possible loss should be disclosed pursuant to FASB ASC Topic 450, Contingencies. MD&A should include discussion of the reasonably likely effects of these contingencies on reported results and liquidity. If the Company retains a financial interest in the discontinued component or in the buyer of that component that is material to the Company, MD&A should include discussion of known trends, events, and uncertainties, such as the financial condition and operating results of the issuer of the security, that may be reasonably expected to affect the amounts ultimately realized on the investments.

Similarly, for dispositions that do not qualify as discontinued operations, certain disclosures within the Exchange Act reports must be provided outside the financial statements. SEC Regulation S-K, Item 303, and paragraph 9220.2 of the SEC’s Financial Reporting Manual (FRM) require registrants to describe in MD&A any unusual or infrequent events or transactions that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to which income was affected. Such a description would include any material disposal transactions for the periods covered, even if those transactions did not meet the discontinued-operations criteria in ASC 205-20.

8.5 Pro Forma Financial Information Under Article 11

The objective of providing pro forma financial information is to enable investors to understand and evaluate the impact of a transaction by showing how that specific transaction (or group of transactions) might have affected the registrant’s historical financial position and results of operations had the transaction occurred at an earlier date. SEC Regulation S-X, Article 11, which establishes the requirements for pro forma information, lists several circumstances in which a registrant may be required to provide pro forma financial information, including when the disposition of a significant portion of a business has occurred or is probable or when other events have occurred for which pro forma information would be material to investors. Pro forma financial information for a significant disposition may be required in a registration statement, proxy statement, or Form 8-K.

8.5.1 Pro Forma Financial Information for a Consummated or Probable Disposition

Pro forma financial information for a significant disposition may be required in a registration statement or proxy statement when a disposition has been consummated or is probable and the historical financial statements do not yet reflect the transaction. Further, when a significant disposition has been consummated and is not yet reflected in the historical financial statements, pro forma information is required to be provided in Form 8-K, Item 2.01. If a disposal is presented as a discontinued operation in the historical financial statements before the disposition is consummated (i.e., the held-for-sale and discontinued-operations criteria are met), certain pro forma financial information may not be required. Further, pro forma financial information for the disposition may be required even if the disposed-of operations do not meet the discontinued-operations criteria.

Example 8-3

Pro Forma Financial Information for a Disposal That Has Occurred

Example 1

Company A, an SEC registrant, announced on April 30, 20X5, that it intends to spin off Component B to its shareholders. Company A determines that B will meet the criteria for presentation as a discontinued operation when the spin-off occurs. The spin-off is completed on November 30, 20X5, and A must file a Form 8-K to report the significant business disposition within four business days. Pro forma financial information reflecting B as a discontinued operation must be provided since A’s historical financial statements do not yet reflect the disposal of B (i.e., B is not presented as a discontinued operation in A’s historical financial statements at the time the Form 8-K must be filed).

Example 2

On December 15, 20X5, Company A, an SEC registrant, enters into an agreement to sell Component B and determines that B will meet the criteria for presentation as a discontinued operation in A’s December 31, 20X5, financial statements. Company A files its 20X5 Form 10-K on February 25, 20X6, and adjusts its financial statements to reflect the discontinued operation for all periods presented. The disposal of B is completed on May 1, 20X6, and A must file a Form 8-K to report the significant business disposition within four business days. However, because A’s historical financial statements already present B’s operations as a discontinued operation in its Form 10-K, A is not required to provide pro forma income statements in the Form 8-K.

8.5.2 Form and Content of Pro Forma Financial Information

For the disposition of a significant business, a pro forma balance sheet should be presented for only the most recent balance sheet required by SEC Regulation S-X, Rule 3-01 (i.e., one pro forma balance sheet as of the end of the fiscal year or the subsequent interim period, whichever is later). In cases in which there are only a few pro forma adjustments and such adjustments are easily understood, a registrant may also consider including a narrative discussion in lieu of the pro forma balance sheet reflecting the effects of the disposition. Pro forma income statements generally should be presented for only the most recent fiscal year and interim period that must be presented. However, SEC Regulation S-X, Rule 11-02(c)(2)(ii), states, “For transactions required to be accounted for under U.S. GAAP or, as applicable, IFRS-IASB by retrospectively revising the historical statements of comprehensive income (e.g., combination of entities under common control and discontinued operations), pro forma statements of comprehensive income must be filed for all periods for which historical financial statements of the registrant are required” (emphasis added). Accordingly, if a disposal meets the discontinued-operations criteria in ASC 205-20, three years of pro forma income statements must be presented. However, if the disposition does not meet these criteria, only one year of pro forma income statement is required. The appropriate subsequent interim periods in the current year are required in both scenarios.

The pro forma balance sheet should be prepared as if the disposal took place on the balance sheet date. In preparing the pro forma income statement(s), an entity should assume that the disposal took place at the beginning of the earliest period presented. The pro forma adjustments for the disposal are limited to adjustments that reflect the accounting for the transaction in accordance with U.S. GAAP or IFRS® Accounting Standards, as applicable. For dispositions, the adjustments may reflect the disposal of assets and related impacts. Pro forma information for the income statement should only be presented through continuing operations.

In addition to the required adjustments noted above, registrants may present, in the explanatory notes to the pro forma financial information, management’s adjustments, which reflect synergies and dis-synergies identified by management when evaluating whether to undertake a disposition. Management’s adjustments may also provide insight into the potential effects of the disposition and the plans that management expects to execute after the disposition (which may include forward-looking information). To enable investors to separate the accounting impact of the transaction from the impact of management’s plans after the transaction, an entity can only present management’s adjustments in “the explanatory notes . . . in the form of reconciliations of pro forma net income . . . and the related pro forma earnings per share data . . . to such amounts after giving effect to Management’s Adjustments.”

For a significant asset disposition in which such information would be material to investors, the registrant may consider including limited pro forma balance sheet information reflecting the effects of the disposition (or, for example, a narrative discussion if adjustments are easily understood).

As noted in Section 8.4, registrants should be mindful of the requirement to provide pro forma information for a significant disposition in the Form 8-K that must be filed four days after the disposition has occurred. Complying with this requirement can be particularly challenging when the registrant must provide three years of pro forma financial information reflecting the discontinued operation. As a reminder, the automatic 71-day extension in Form 8-K, Item 9.01, is not available for a significant disposition.

8.6 Impact of Reporting a Discontinued Operation on Financial Information About Other Entities

When a component meets the discontinued-operations criteria in ASC 205-20, a registrant must consider the impact this may have on its requirement to provide financial statements or financial information about other entities (e.g., acquired businesses, equity method investees, guarantors, and issuers of guaranteed securities).

8.6.1 SEC Regulation S-X, Rule 3-05: Financial Statements of Businesses Acquired or to Be Acquired

Under SEC Regulation S-X, Rule 3-05, SEC registrants are required to evaluate the significance of an acquired or to be acquired business (acquiree) in accordance with the tests in SEC Regulation S-X, Rule 1-02(w) (i.e., the asset, income, or investment test), to determine whether the acquiree’s financial statements are required. Because the income test is based on a measure of income and revenue (after intercompany eliminations) from continuing operations, the reporting of a discontinued operation could affect the results of the significance test.

As discussed in Section 8.3, a company may be required, or may elect, to file its audited annual financial statements that give retrospective effect to a discontinued operation. For businesses acquired after the date on which the retrospectively adjusted financial statements are filed, registrants must use those retrospectively revised financial statements when performing the significance tests. Paragraph 2025.1 of the FRM further indicates that registrants must also use these adjusted financial statements to evaluate (1) probable acquisitions and (2) the “[a]ggregate impact of all individually insignificant businesses that have occurred since the end of the most recently completed fiscal year.”

Note 1 to paragraph 2025.1 of the FRM indicates that for businesses acquired on or before the date on which the retrospectively adjusted financial statements are filed, significance may be measured on the basis of “either (A) the registrant’s audited financial statements for its most recently completed fiscal year that were filed prior to the retrospectively adjusted financial statements giving effect to the discontinued operation or (B) the registrant’s filed financial statements for the most recently completed fiscal year that reflect retrospective application of the discontinued operation.” This paragraph goes on to state that a “registrant must consistently use [either option A or B] to measure significance of all individual acquisitions completed on or before the date the retrospectively adjusted financial statements are filed.”

8.6.2 SEC Regulation S-X, Rules 3-09 and 4-08(g): Financial Statements and Summarized Financial Information for Equity Method Investments

Under SEC Regulation S-X, Rules 3-09 and 4-08(g), SEC registrants are required to evaluate the significance of an equity method investee by performing the tests in SEC Regulation S-X, Rule 1-02(w) (i.e., the asset, income, or investment test), to determine whether they must provide the investee’s (1) financial statements, (2) summarized financial information, or (3) both. Because the calculation for the income test is based on a measure of income and revenue (after intercompany eliminations) from continuing operations, the reporting of a discontinued operation could affect the results of the significance test.

The prescribed significance tests are performed annually in connection with the filing of a Form 10-K (i.e., at the end of the registrant’s fiscal year). Accordingly, significance is not remeasured when updated financial statements that reflect retrospective adjustments are filed in a Form 8-K (or included in or incorporated into a registration statement). However, when a registrant files its next Form 10-K, it should be mindful that significance should be measured for each annual period presented in the financial statements on the basis of amounts that were retrospectively adjusted. Consequently, as a result of retrospective adjustments for discontinued operations, a previously insignificant equity method investee may become significant and a registrant may be required to file the investee’s financial statements (or summarized information under Rule 4-08(g)) in the registrant’s next Form 10-K — even if the registrant was not required to provide these items in a prior Form 10-K. See paragraph 2410.8 of the FRM for additional guidance.

Example 8-4

Significance of an Equity Method Investee When a Discontinued Operation Is Reported

Company A, an SEC registrant, disposed of Component B on November 30, 20X5. Historically, A has not been required to provide separate financial statements for Equity Method Investment C because C has not met the significance thresholds. While preparing its Form 10-K for the year ended December 31, 20X5, which retrospectively reflects B as a discontinued operation for all periods presented, A determines that C is now more than 20 percent significant to each of the three years ended December 31, 20X5, as a result of the retrospective presentation of discontinued operations. Company A must file C’s audited financial statements as of December 31, 20X5, and December 31, 20X4, and for the three years ended December 31, 20X5.

8.6.3 SEC Regulation S-X, Rule 3-10: Financial Statements of Guarantors and Issuers of Guaranteed Securities

Registrants that have registered debt with subsidiary or parent guarantees may make use of certain accommodations in SEC Regulation S-X, Rule 3-10, and provide summarized financial information in lieu of separate financial statements for guarantor subsidiaries.

When a registrant disposes of a guarantor subsidiary, that subsidiary is typically released from its guarantee. Changes in the composition of guarantors and nonguarantors (e.g., a change in a subsidiary designated as guarantor to one designated as nonguarantor) may affect the summarized financial information. For further details, see Section 2.3.2.4.2 of Deloitte’s Roadmap SEC Reporting Considerations for Guarantees and Collateralizations.

8.7 “To-Be-Issued” Accountant’s Report

In anticipation of an initial public offering, an entity may enter into a transaction to dispose of a component or group of components that meets the discontinued-operations criteria in ASC 205-20. Although the disposal may occur after the date of the entity’s most recent balance sheet included in the registrant’s financial statements (in which case presentation as a discontinued operation would typically be precluded under U.S. GAAP), in certain circumstances the registrant may be able to present the transaction retrospectively in the entity’s financial statements and include a “to-be-issued” auditor’s report on those financial statements. See Sections 3.8 and 5.6.2.1 of Deloitte’s Roadmap Initial Public Offerings for further discussion of “to-be-issued” auditor’s reports.

Specifically in relation to discontinued operations, the highlights of the June 25, 2014, CAQ SEC Regulations Committee joint meeting with the SEC staff discuss the following:

The FRM guidance cites specific examples of when such a draft report may be used but indicates that use of a draft report is not limited to these events. The Committee asked the staff whether a registration statement including a to-be-issued audit report and the related retrospectively revised financial statements might be reviewed in a situation where a registrant has a component that qualifies as a discontinued operation before an initial registration statement is filed but after the date of the latest balance sheet included in the initial filing.

In order to qualify, the following must be completed prior to the initial filing: 1) the disposal of the discontinued operation has occurred; 2) the audit of the financial statements, including the retrospective revision; and 3) registrant consultation with the appropriate Assistant Director group. [Emphasis added]

In addition to meeting all the requirements discussed by the SEC Regulations Committee above, a pre-effective amendment to the registration statement must contain (1) updated financial statements for a period that includes the disposal date and (2) an unrestricted accountant’s report. That is, the registration statement cannot be declared effective until the to-be-issued report is removed and the accountant’s report is finalized. Entities are encouraged to consult with their independent accountants if they believe that they meet the requirements noted above.

Appendix A — Glossary of Selected Terms in ASC 205-20, ASC 360-10, and ASC 805-10

Appendix B — Titles of Standards and Other Literature

Appendix C — Abbreviations

Abbreviation	Description
AICPA	American Institute of Certified Public Accountants
AOCI	accumulated other comprehensive income
APB	Accounting Principles Board
AR	accounts receivable
ASC	FASB Accounting Standards Codification
ASU	FASB Accounting Standards Update
BC	Basis for Conclusions
C&DI	SEC’s Compliance and Disclosure Interpretation
CAQ	Center for Audit Quality
CEO	chief executive officer
CFR	Code of Federal Regulations
CGU	cash-generating unit
CTA	cumulative translation adjustment
DUSTR	SEC disclosure update and simplification technical release
EBITDA	earnings before income taxes, depreciation, and amortization
EDGAR	SEC’s Electronic Data Gathering, Analysis, and Retrieval system
EITF	Emerging Issues Task Force
Exchange Act	Securities Exchange Act of 1934
FASB	Financial Accounting Standards Board
FCC	Federal Communications Commission
FRM	SEC Financial Reporting Manual
FTC	Federal Trade Commission
GAAP	generally accepted accounting principles
IT	information technology
MD&A	Management’s Discussion and Analysis
NFP	not-for-profit (entity)
PCAOB	Public Company Accounting Oversight Board
PP&E	property, plant, and equipment
REIT	real estate investment trust
ROU	right of use
SAB	SEC Staff Accounting Bulletin
SEC	U.S. Securities and Exchange Commission
Securities Act	Securities Act of 1933

Appendix D — Roadmap Updates for 2023

The tables below summarize the substantive changes made since the issuance of the 2022 edition of this Roadmap.

New Content

Section	Title	Description
4.5	Other Nonreciprocal Transfers Other Than Spin-Offs	New section addressing other nonreciprocal transfers that are not spin-offs.
4.5.1	Common-Control Transactions	New section addressing impairment considerations in common-control transactions.

Amended Content

Section	Title	Description
1.4	Scope of ASC 205-20 — Presenting Discontinued Operations	Added “Changing Lanes” to discuss the issuance of ASU 2023-05.
2.2	When to Test a Long-Lived Asset (Asset Group) for Recoverability	Added examples illustrating events or changes in circumstances that may indicate that the carrying amount of a long-lived asset (group) is not recoverable.
2.3.1	Entity-Wide Assets	Added an example illustrating the impairment assessment for an entity-wide asset.
2.3.6	Foreign Asset Groups and Accumulated Other Comprehensive Income, Including Foreign Currency Translation, in Asset Groups	Clarified that an entity performs the recoverability test in its functional currency even if the books of record of the asset group are not maintained in this currency. Clarified that it is appropriate to analogize to the guidance in ASC 830-30-45-13 for all items of AOCI when evaluating a foreign asset group for recoverability while it is classified as held and used.
2.3.7	Order of Impairment Testing When an Asset Group Is Held and Used	Addressed clarification in ASU 2016-20 related to order of impairment testing. Added accounts receivable and inventory to the list of assets that would be tested for impairment before the long-lived asset group is tested for impairment.
2.4.1.1	Estimates of Future Cash Flows Are Undiscounted and Based on the Entity’s Expected Use of the Asset Group	Clarified that cash flows used in the recoverability test should be based only on facts and circumstances available as of the testing date.
2.4.1.3	Estimates of Future Cash Flows Should Be Reasonable	Clarified that if there is substantial doubt about an entity’s ability to continue as a going concern, the use of a probability-weighted approach to estimate cash flows may be warranted.
2.4.3	Probability-Weighted and Best-Estimate Cash Flow Approaches	Clarified the circumstances in which an entity should use a probability-weighted approach to estimate cash flows.
3.4.1	Goodwill	Presented guidance on allocating goodwill to disposals in a tabular format.
3.4.2	Cumulative Translation Adjustments and Other Items of Accumulated Other Comprehensive Income	Added guidance clarifying that it is appropriate to analogize to the guidance in ASC 830-30-45-13 for all items of AOCI.
3.5.3	Costs to Sell	Added guidance clarifying that extinguishment gains or losses or prepayment penalties should not be included in costs to sell.
3.6.1	Depreciation and Amortization	Explained that interest on any related lease liabilities should continue to be accreted, although entities should cease amortization of any ROU assets once the disposal group meets the held-for-sale criteria.
4.2	Assets to Be Abandoned	Incorporated additional (1) guidance on the revision of depreciation estimates when an asset is planned to be abandoned and (2) considerations related to situations in which fair value may approximate zero.
4.3	Nonmonetary Exchange	Clarified that if a nonmonetary exchange does not meet any of the conditions in ASC 845-10-30-3 and is accounted for at fair value, the disposal should be assessed as a sale transaction and the disposal group should be classified as held for sale when the criteria are met.
4.4	Spin-Offs and Other Nonmonetary Exchanges Recorded at Carrying Amount	Clarified the definition of a nonreciprocal transfer as well as guidance related to nonreciprocal transfers that are not spin-offs.
5.2.2	Strategic Shift That Has (or Will Have) a Major Effect	Clarified that the criteria for reporting discontinued operations should be separately evaluated at each level of financial statement reporting.
5.6	A Business or Nonprofit Activity Classified as Held for Sale Upon Acquisition	Added “Changing Lanes” to reflect the issuance of ASU 2023-05.
6.2	Balance Sheet Presentation for Assets (Disposal Groups) Classified as Held for Sale That Are Not Discontinued Operations	Updated guidance to reiterate that an entity should not reclassify prior-period balance sheets.
7.2	Balance Sheet Presentation of Discontinued Operations	Clarified guidance on when held-for-sale or held-for-disposition presentation in prior periods is appropriate.
7.4.2	Adjustments to Amounts Previously Reported in Discontinued Operations	Removed reference to presentation of discontinued operations before ASU 2014-08, since the amendment made by this ASU is now effective for all entities.
7.7.1	Changes to a Plan of Sale	Clarified guidance related to changes to a plan for selling a component that met the criteria for a discontinued operation.
7.11	Flowchart of the Required Disclosures for Discontinued Operations	Added “Changing Lanes” to reflect the issuance of ASU 2023-05.
8.2	Financial Statements and Other Affected Financial Information in Exchange Act Reports	Added earnings (loss) per share to the list of summarized financial information.
8.5.1	Pro Forma Financial Information for a Consummated or Probable Disposition	Clarified when pro forma information must be provided in a Form 8-K, Item 2.01, for a consummated or probable disposition.

	Christine Mazor Audit & Assurance Partner Deloitte & Touche LLP +1 212 436 6462 cmazor@deloitte.com		Matt Himmelman Audit & Assurance Partner Deloitte & Touche LLP +1 714 436 7277 mhimmelman@deloitte.com
	Stefanie Tamulis Audit & Assurance Managing Director Deloitte & Touche LLP +1 203 563 2648 stamulis@deloitte.com		Ignacio Perez Audit & Assurance Managing Director Deloitte & Touche LLP +1 203 761 3379 igperez@deloitte.com
	Andy Winters Audit & Assurance Partner Deloitte & Touche LLP +1 203 761 3355 anwinters@deloitte.com