The Financial Accounting Standards Board and the International Accounting Standards Board issued separate but converged proposals on defining when an operation is “discontinued” and therefore subject to the related disclosure and accounting requirements.

FASB published proposed staff position FAS 144-D Amending the Criteria for Reporting a Discontinued Operation to establish disclosure requirements for all the pieces and parts of an entity that are either disposed of or considered for sale. The guidance would define continued operations as an operating segment that has been disposed of or is held for sale, or a business or non-profit activity that meets the criteria to be classified as held for sale on acquisition.

IASB says its proposed guidance likely will result in fewer items being recognized in financial statements as discontinued operations than entities currently typically present. The goal, says FASB, is to more clearly establish when the income effects of such pieces and parts should be reported in the income statement under discontinued operations, and to improve disclosure around such operations whether they’re deemed discontinued or continuing.

FASB also noted that the boards’ joint efforts to establish a new method of financial statement presentation stumbled on the different definitions in U.S. and international accounting rules around discontinued operations. As such, both boards chose to redefine discontinued operations both to improve and converge accounting around it directly and to advance the work on financial statement presentation indirectly.

Both proposals are open to comment through Jan. 23, 2009.