NEWS RELEASE 7/12/00
FASB Issues Proposed Rule on Asset Impairment and Disposals
Norwalk, CT, July 12, 2000—The Financial Accounting Standards Board today issued a proposed Statement on assetimpairment or disposal of long-lived assets that would supersede Statement 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, issued in March 1995. Comments on the proposed Statement are requested by October 13.
The proposed Statement would establish a single accounting model for long-lived assets to be disposed of. This accounting model would also apply to certain obligations associated with a disposal activity, including the restructuring of an existing activity, whether or not it involves the disposal of long-lived assets. Additionally, the proposed Statement, which would retain the recognition and measurement provisions of Statement 121 for long-lived assets to be held and used, would provide additional guidance for implementing those provisions.
"Prior to this proposed Statement, guidance for accounting for the disposal of long-lived assets was provided by different accounting pronouncements," explained FASB Project Manager Linda MacDonald. "As a result, the accounting for those disposal transactions was inconsistent and complex. Because the provisions of this proposed Statement would apply in accounting for the disposal of all long-lived assets and for certain obligations associated with those disposal transactions, it would improve comparability in financial reporting and reduce that complexity."
The Exposure Draft, Accounting for the Impairment or Disposal of Long-Lived Assets and for Obligations Associated with Disposal Activities, would be effective for financial statements issued for fiscal years beginning after December 15, 2001.
During the comment period, one copy of the proposal (code E157) will be available free of charge from the FASB Order Department, telephone (800) 748-0659. The proposal also is available at this website under Exposure Drafts.