New treatment of discontinued operations
According FASBs final guidance, the standard expands the
disclosures for discontinued operations and requires new disclosures for
disposals of individually significant components that do not meet the new
definition of a discontinued operation (1). This means that when companies determine
if the transaction qualifies is the discontinue operations, the continuing cash
flow and thecontinuing involvement with disposed components will not be considered
as the standards. The definition of the discontinued operation is changes (1) a
component of an entity or group of components that has been disposed of by
sale, disposed of other than by sale or is classified as held for sale that
represents a strategic shift that has or will have a major effect on an
entitys operations and financial results or (2) an acquired business or
nonprofit activity (the entity to be sold) that is classified as held for sale
on the date of the acquisition (2) This is means that, if the companies has
the changes, which can be classified as strategic shift and has the major
effect on companies financial statements, then it can be treat as the
discontinued operations. Cut done or add the major product lines, and enter or
exit a major geographical area are both the good examples for the strategy
shift.
In cut done or add major products
lines, if each product line is the major line for company, then the change of
products line will treat as discontinue operations. Major line for the company
means each major lines operations and their cash flow can be distinguish from
others, and each line is play the critical role in companys operating and
financial results. Each major line may has their own cash flow, and is the main
component for the companies. Once the company choose to disposal some major
product lines, it will be the strategy decision. Add or cut the major product
lines, means it will be large changes in the companies operations and
financials. Whats more, the present on the financial statements will be
changed. Because disposal the major product line will causes the change in
companies operation and financial results, it is the strategy shift. Once it
is the strategy shift and has major influence in companies financial results,
it should be present as the discontinue operations.
If one company has many stores in
some main geographical are, and each areas profits account large percentage in
companys total profit, and each geographical are as major effect on financial
statements, then disposal the major geographical should be written down as the
discontinues operations. Once the company wants to exit one main geographical
area, the companys financial results, profits distribution, and operation
conditions will be influenced, so it also is the major strategy shift. Under
the new standards, if each main area is the important component of the company,
disposal major geographical area will be classified as the discontinue operations.

As the rule of definition for the
discontinue operation is changed, it is more strict for the companies to
consider the discontinue operations. Once there are major financial influence
or strategy shift, it should be discontinue operations.

Work Citeds
Technical
Line- How discontinued operations are changing FASB. 2014. New treatment of discontinued operations According FASBs final guidance, the standard expands the
disclosures for discontinued operations and requires new disclosures for
disposals of individually significant components that do not meet the new
definition of a discontinued operation (1). This means that when companies determine
if the transaction qualifies is the discontinue operations, the continuing cash
flow and thecontinuing involvement with disposed components will not be considered
as the standards. The definition of the discontinued operation is changes (1) a
component of an entity or group of components that has been disposed of by
sale, disposed of other than by sale or is classified as held for sale that
represents a strategic shift that has or will have a major effect on an
entitys operations and financial results or (2) an acquired business or
nonprofit activity (the entity to be sold) that is classified as held for sale
on the date of the acquisition (2) This is means that, if the companies has
the changes, which can be classified as strategic shift and has the major
effect on companies financial statements, then it can be treat as the
discontinued operations. Cut done or add the major product lines, and enter or
exit a major geographical area are both the good examples for the strategy
shift. In cut done or add major products
lines, if each product line is the major line for company, then the change of
products line will treat as discontinue operations. Major line for the company
means each major lines operations and their cash flow can be distinguish from
others, and each line is play the critical role in companys operating and
financial results. Each major line may has their own cash flow, and is the main
component for the companies. Once the company choose to disposal some major
product lines, it will be the strategy decision. Add or cut the major product
lines, means it will be large changes in the companies operations and
financials. Whats more, the present on the financial statements will be
changed. Because disposal the major product line will causes the change in
companies operation and financial results, it is the strategy shift. Once it
is the strategy shift and has major influence in companies financial results,
it should be present as the discontinue operations. If one company has many stores in
some main geographical are, and each areas profits account large percentage in
companys total profit, and each geographical are as major effect on financial
statements, then disposal the major geographical should be written down as the
discontinues operations. Once the company wants to exit one main geographical
area, the companys financial results, profits distribution, and operation
conditions will be influenced, so it also is the major strategy shift. Under
the new standards, if each main area is the important component of the company,
disposal major geographical area will be classified as the discontinue operations.
As the rule of definition for the
discontinue operation is changed, it is more strict for the companies to
consider the discontinue operations. Once there are major financial influence
or strategy shift, it should be discontinue operations. Work CitedsTechnical
Line- How discontinued operations are changing FASB. 2014.