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ASC 205-20-45 requires segregation of any liabilities related to disposal groups classified as held for sale on the balance sheet. Assets and liabilities should not be offset and presented as a single amount. The major classes of liabilities classified as held for sale should be separately disclosed on the balance sheet or in the footnotes.
ASC 205-20-45 does not provide guidance on whether liabilities held for sale should be classified as current or noncurrent on the balance sheet. Generally, at the held-for-sale date, it would be acceptable to classify liabilities held for sale as current when (1) the disposal is expected to be consummated within one year of the balance sheet date, and (2) the entity expects to receive cash or other current assets upon disposal and the sale proceeds will not be used to reduce long-term borrowings. If such conditions are not met at the reporting period date, we would expect to see two line items related to the liabilities of a disposal group held for sale — current and noncurrent. Classification should be assessed each reporting period date through the sale date.
We have seen instances in practice where liabilities of discontinued components (that is not a discontinued operation) have been reclassified on the balance sheets of periods ended prior to the period in which the component becomes held for sale or is disposed of, presumably under the theory that this is an extension of the reclassification requirement for operations of discontinued operations. While not required under ASC 205-20, the Codification of Statements on Auditing Standards Section 708, Consistency of Financial Statements, implies that such reclassifications are permissible and requires that material reclassifications be indicated and explained in the footnotes. Accordingly, provided appropriate disclosure is made, reporting entities may retroactively segregate liabilities of discontinued components.. For additional information related to discontinued operations, see FSP 27.
We also believe that, in a spin-off transaction that does not qualify as a discontinued operation, it is acceptable to reclassify the prior period balance sheet into segregated assets and liabilities (similar to if the entity had been held for sale). However, because assets disposed of through a spin-off transaction are required to remain classified as held and used until the spin-off has occurred, reclassification of the prior year balance sheet would not be appropriate until completion of the spin-off.

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