Two New Statements
The IASC approved two new standards recently, one of which differs from guidance in FASB statements.
IAS no. 35, Discontinuing Operations, addresses when to make disclosures. It covers presentation and disclosure only; earlier IASC statements provide guidance on recognition and measurement. The new standard says a discontinuing operation should be a segment, or a major part of a segment, under IAS no. 14, Segment Reporting. Entities should disclose carrying amounts of assets and liabilities, earnings and cash flows and net selling price of any assets for which there are binding sale agreements.
IAS no. 36, Impairment of Assets, differs from FASB Statement no. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Elizabeth Fender, AICPA director of accounting standards, discussed some of the variations: The FASB statement has a fair value model for recognizing impairment. The new IASC standard says the recoverable amount is the higher of the net selling price or the value in use. IAS no. 36 probably will lead to more frequent testing than the U.S. standard does. Fender is staff liaison to the Institutes IASC delegation.
The new standards are available from the IASC by calling 44-171-427-5927. Additional information about ordering options and further descriptions of the standards themselves are available on the IASCs web site, www.iasc.org.uk .